The most important accounting objective for executive stock options is: a. Measuring and reporting the amount of compensation expense during the service period. b. Measuring their fair value for balance sheet purposes. c. To disclose increases or decreases in the stock options held at the end of each accounting period. d. None of these answer choices are correct.

Question

Business

Felix Fox

27 January, 21:00

The most important accounting objective for executive stock options is: a. Measuring and reporting the amount of compensation expense during the service period. b. Measuring their fair value for balance sheet purposes. c. To disclose increases or decreases in the stock options held at the end of each accounting period. d. None of these answer choices are correct.

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Answers (1)

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Ayla Sexton · Answer 1

Measuring and reporting the amount of compensation expense during the service period.

Explanation:

A stock option is defined as an instrument that allows and investor that holds it to sell or purchase shares of a particular stock at a defined period in time.

There is no obligation on the investor to buy or sell shares, but it is a right he can enjoy.

The most important accounting consideration of executive stock options will be as a form of executive compensation. So rather than give salaries, bonuses and other compensation companies tend to give employees stock options.

Measuring and reporting the amount of compensation expense during a particular period is an important accounting objective.