When a Stock Option Plan for Employees Is Compensatory, the Measurement

question 32

Multiple Choice

When a stock option plan for employees is compensatory, the measurement date for determining compensation cost is the

• A) Date the option plan is adopted, provided it precedes the date on which the options may first be exercised by less than one operating cycle
• B) Date on which the options may first be exercised (if the first actual exercise is within the same operating period) or the date on which a recipient first exercises any of his options
• C) First date on which are known both the number of shares than an individual employee is entitled to receive and the option or purchase price, if any
• D) Date each option is granted

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Definitions:

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the ownership interest of the business owners.

Expenses

Costs incurred by a business in the process of earning revenue.

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities, often seen as the net worth or book value of the company to the owners.

Consulting Revenues

Income generated from providing expert advisory services to clients.