On January 1,2016,Blue Inc

Multiple Choice

On January 1,2016,Blue 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.Blue initially estimates that it is not probable the goal will be achieved,but in 2017,after one year,Blue estimates that it is probable that divisional revenue will increase by 6% by the end of 2018.Ignoring taxes,what is the effect on earnings in 2017?

A) $200,000.
B) $400,000.
C) $600,000.
D) $800,000.