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Question
Which of the following arguments wasn't used to support the continuation of the accounting for stock-based compensation plans as allowed under APB Opinion No. 25?
A. Stock options do not involve a cash flow, therefore the recording of an expense would violate appropriate income measurement.
B. The Black-Scholes method of valuing stock options has not been widely accepted and is arbitrary.
C. The fair value approach could jeopardize compliance with contract terms and conditions.
D. The fair value approach would increase expenses and lower net income which would result in lower stock prices.
Answer
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