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Business, 26.11.2019 17:31 cedrahasouneh10

On june 1, year 1, oak corp. granted stock options to certain key employees as additional compensation. the options were for 1,000 shares of oak's $2 par value common stock at an option price of $15 per share. market price of this stock on june 1,year 1, was $17 per share. using an acceptable option pricing model oak determined that total compensation cost under the stock option plan was $5,000. the options were exercisable beginning january 2, year 2, and expire on december 31, year 3. on april 1, year 2, when oak's stock was trading at $21 per share, all the options were exercised. what amount of pretax compensation should oak report in year 1 in connection with the options?

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