GAAP for sharebased compensation requires firms to Select on

GAAP for share-based compensation requires firms to:

Select one:

a. Expense the fair value of options (determined at grant date) as the options vest

b. Expense options through the income statement (which may be in different line-items on the income statement (COGS, SG&A, etc.))

c. Record a separate direct increase to equity (in order to offset the decrease to retained earnings from the expense) so that the net impact to equity from the expense (excluding the tax impact) is zero

d. None of the listed answers

e. All of the listed answer

Solution

GAAP for share-based compensation requires firms to Expense the fair value of options (determined at grant date) as the options vest Option A is correct