How Is the Bargain Element for a Stock Option Calculated

question 120

Multiple Choice

How is the bargain element for a stock option calculated?

• A)The difference between the strike price and the market price on the date of grant
• B)The difference between the market price on the exercise date and the market price on the date of grant
• C)The difference between the market price on the exercise date and the strike price
• D)The difference between the market price on the sale date and the strike price

---

Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset over its useful life.

Indirect Method

A technique used in cash flow statements where net income is adjusted for non-cash transactions and changes in working capital to calculate net cash from operating activities.

Cash Dividend

A distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders in the form of cash.

Statement Of Cash Flows

A financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.