Which of the Following Was True About Employee Stock Options

question 8

Multiple Choice

Which of the following was true about employee stock options prior to 1995?

• A) The options never had any affect on a company's financial statements
• B) The value of options which were at-the-money when issued had to be expensed on the income statement
• C) The value of options which were at-the-money when issued had to be reported in the notes to the financial statements
• D) Options which were at-the-money when issued did not affect a company's financial statements

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Definitions:

Payroll Tax

Taxes imposed on employers and/or employees, typically based on the wages or salaries that employees earn.

Workers

Individuals engaged in a form of employment or labor, contributing their skills and efforts in exchange for financial compensation or wages.

Gas Tax

A tax imposed on the sale of gasoline, typically used to fund transportation and infrastructure projects.

Inelastic

Describes demand that is relatively unresponsive to price changes, meaning the percentage change in quantity demanded is smaller than that in price.