Under the treasury stock method all of the following are cor

Under the treasury stock method, all of the following are correct statements except a.it is assumed that the options/warrants or equivalents are exercised at the beginning of the year (or date of issue if later). b. it is assumed that the proceeds are used to purchase common shares for the treasury at the average market price that exists during the year. c. if the exercise price is higher than the average market price, then the proceeds from exercise are not sufficient to buy back all of the shares. d. if the exercise price is lower than the average market price, then the proceeds from exercise are not sufficient to buy back all of the shares.

Solution

All statements are true except

Answer) option c

if the exercise price is higher than the average market price, then the proceeds from exercise are not sufficient to buy back all of the shares.