On January 1,2016,Black Inc

Multiple Choice

On January 1,2016,Black 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.Black initially estimates that it is probable the goal will be achieved.In 2017,after one year,Black estimates that it is not probable that divisional revenue will increase by 6% in three years.Ignoring taxes,what is the effect on earnings in 2017?

A) $200,000 decrease.
B) $200,000 increase.
C) $400,000 increase.
D) No effect.