The Main Issue in the Debate Over Accounting for Employee

question 56

Multiple Choice

The main issue in the debate over accounting for employee stock options was:

• A) Which employees should receive options.
• B) The amount of compensation expense that a company should recognize.
• C) How many options should be granted to key executives.
• D) The tax consequences of employee stock options.

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Definitions:

Derived Demand

The demand for a good or service that arises from the demand for another good or service. For example, the demand for steel is derived from the demand for cars.

Factor Market

A market where factors of production (such as labor, capital, and land) are bought and sold, different from markets for goods and services.

Marginal Productivity Theory

An economic theory that explains the determination of wages in the factor market, based on the productivity of the marginal unit of labor or other factors of production.

Human Capital

The collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value.