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Question
Which of the following statements does not accurately reflect the financial accounting for compensatory stock option plans?
A. Compensation expensed is allocated equally over the service (vesting) period.
B. The compensation expense is not adjusted for changes in the market value of the stock options during the service (vesting) period.
C. The paid-in capital stock options account is credited when compensation expense is recorded each year.
D. Total owners' equity is increased by the par value of the common stock issued when the options are converted.
Answer
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D. Outstanding stock options.
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What is the owners' equity balance on December 31, 2012?
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B. It is the prevailing view of GAAP.
C. Its focus is on owners' equity.
D. Whether creditors or shareholders provided the firm's assets is irrelevant.
Q:
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SFAS No. 123 required companies to use the fair value approach when determining compensation expense pertaining to stock options.