Which of the Following Statements Is True Regarding Share Appreciation

question 21

Multiple Choice

Which of the following statements is true regarding share appreciation rights (SAR) payable in cash?

• A)Changes in estimated total compensation are recorded as prior period adjustments.
• B)The amount of compensation under the SAR plan is unknown until the rights are actually exercised.
• C)At the time of exercise a participant may receive either cash or common stock.
• D)Deferred compensation expense is recorded at the time the share appreciation rights are granted.

---

Definitions:

Common Stock

Corporate stock that does not convey any preferences to its holders.

Corporation

A legal entity formed by issuing stock to investors, who are the owners of the corporation.

Preferences

Preferences typically involve decisions or policies that give priority or advantage to particular individuals or groups, often seen in legal contexts such as bankruptcy.

Corporate Veil

A legal concept separating the actions of a corporation from its shareholders, protecting them from being personally liable for the company's debts and obligations.