On December 31, 2019, Gorley Industries’ executives were granted the option to buy 100,000 shares of the firm’s $5 par common stock at an option price of $25 per share. According to the Black-Scholes model, the total compensation expense associated with the options is $225,000. These options, which represent compensation for services provided over a three-year period, become exercisable on January 1, 2020. As of December 31, 2020, none of the executives had chosen to exercise their options. If Gorley uses the fair value method, how will the executives’ stock options affect the firm’s net income for 2020?
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On December 31, 2019, Gorley Industries’ executives were granted the option to buy 100,000 shares of...
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