NRE Corporation has a stock option plan for its managers that provides that each qualified manager may receive an option

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NRE Corporation has a stock option plan for its managers thatprovides that each qualified manager may receive an option for aspecified number of shares of the company’s $1 par value stock. Employees must continue working for the company for threeyears to earn the option grants, which may be exercised any timeafter the three years at an option price of $10 per share. OnJanuary 1, 2016, the managers were granted options for 3,000 shareswhen the market price of the shares was $16 per share. Thefair value of the options on this date was $24 per option;therefore, the total fair value of the options granted was $72,000. The company has a December 31 year-end.
Requirements:
a) Prepare the journal entry required for each of the yearsended December 31, 2016, 2017, and 2018.
b) Prepare the entry required to reflect the exercise ofone-half of the options on January 5, 2019, when the market priceof the stock is $30 per share.