How Should Stock Options Be Accounted for Under IASB Standard

question 8

Multiple Choice

How should stock options be accounted for under IASB standard on stock options (IFRS 2) ?

• A) Since their value is not determinable until a future date, they are not recorded, but only disclosed in the notes to the financial statements.
• B) A compensation expense is recorded based on the value of the options expected to vest as of the date the options are granted.
• C) An expense is recorded only if a market value for the options exists on the date the options are granted.
• D) The options are recorded as a liability for the value of the stock at the exercise date.

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Definitions:

Direct Labor

Labor costs directly tied to the production of goods or services, such as wages for assembly line workers.

Probability Distributions

Mathematical functions that provide the probabilities of occurrence of different possible outcomes for an experiment.

Sample Space

Every conceivable outcome that a statistical trial might produce, gathered together.

Experiment

An experiment is a methodologically designed study that manipulates variables to determine their effect on an outcome, allowing for the testing of hypotheses and cause-and-effect relationships.