All of these answer choices are correct. 4. Compensation expense resulting from a compensatory share option plan isgenerally 5. The date on which total compensation expense is computed in a share option plan isthe date 6. Vernon Corporation offered detachable 5-year warrants to buy one ordinary share(par value €5) at €20 (at a time when the shares were selling for €32). Theprice paid for 2,000, €1,000 bonds with the warrants attached was €205,000.
The market price of the Vernon bonds without the warrants was €180,000,and the market price of the warrants without the bonds was €20,000. Whatamount should be allocated to the warrants? 7. On December 31, 2018, Gonzalez Company granted some of its executivesoptions to purchase 100,000 shares of the company’s €10 par ordinaryshares at an option price of €50 per share. The Black-Scholes option pricingmodel determines total compensation expense to be €750,000. The optionsbecome exercisable on January 1, 2019, and represent compensation forexecutives’ services over a three-year period beginning January 1, 2019. AtDecember 31, 2019 none of the executives had exercised their options. Whatis the impact on Gonzalez’s net income for the year ended December 31,2019 as a result of this transaction under the fair value method? a.€250,000 increase.b.€750,000 decrease.c.€250,000 decrease. d.€0.
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