On January 1, 2018, Red Inc

Multiple Choice

On January 1, 2018, Red Inc. issued stock options for 200,000 shares to a division manager. The options have an estimated fair value of $6 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 6% in three years. Red initially estimates that it is probable the goal will be achieved. Ignoring taxes, what is compensation expense for 2018?

A) $0.
B) $200,000.
C) $400,000.
D) $1,200,000.