Exhibit 16-5 on January 1, 2010, Roberto Company Adopts a Compensatory

Exhibit 16-5 On January 1, 2010, Roberto Company adopts a compensatory stock option plan and grants 40 executives 1, 000 shares each at $30 a share.The fair value per option is $7 on the grant date.The company estimates that its annual employee turnover rate during the service period of three years will be 4%.
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Refer to Exhibit 16-5.At the end of 2011, the company estimates that the employee turnover will be 5% a year for the entire service period.At the end of 2012, only 30, 000 options vest as only 30 of the 40 executives actually remain.The compensation expense for 2012 will be (Round off turnover calculations to three decimal places and answer to the nearest dollar.)

A) $49, 957
B) $70, 000
C) $80, 022
D) $82, 575

Correct Answer:

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