Compensation Expense Must Be Adjusted During the Service Period to Reflect

question 128

True/False

Compensation expense must be adjusted during the service period to reflect changes in the fair value of options caused by changes in the market price of the underlying shares.

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Definitions:

Trading Securities

Financial assets that are purchased with the intention of selling them in the short term to profit from price fluctuations.

Fair Value

An estimated market value of an asset or liability based on current market prices or valuations.

Temporary Investments

Short-term investments made by a company in securities that can be easily converted into cash, typically held for a year or less.

Market Price

The current market price for acquiring or disposing of an asset or service.