Some Managers Argue That Since Employee Stock Options Are Usually

question 130

Multiple Choice

Some managers argue that since employee stock options are usually issued at an exercise price that is less than or equal to market value when they are granted, they have no value. However, generally accepted accounting principles require that they be recorded as compensation expense. The primary reason for this is:

• A) To achieve proper matching.
• B) The time value in the options creates economic value.
• C) The entity must use employee stock options in order to compete for talent.
• D) They are accepted by employees as compensation.

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Definitions:

Concrete Level

Refers to tasks, ideas, or projects that are specific, definite, and detail-oriented, as opposed to abstract concepts.

Sensate Level

Refers to the capacity or level at which physical sensations or feelings are experienced and perceived.

Symbolic Level

The symbolic level refers to the dimension of human culture and communication where symbols (objects, actions, or words) carry specific meanings within a culture or subculture.

Abstract Level

A term referring to a high degree of summarization or generalization, dealing with ideas rather than concrete realities.