Which of the following is an acceptable method of accounting for employee stock options?
A) prospective method
B) fair value method
C) intrinsic method
D) historical value method

Question

Quizplus · Accepted Answer

The fair value method is the most common and accepted method of accounting for employee stock options. It involves estimating the fair value of the options on the grant date and recognizing the expense over the vesting period. This method is preferred because it provides a more accurate representation of the true cost of the options to the company. The other options listed (prospective, intrinsic, and historical value methods) are not accepted methods of accounting for employee stock options.

Which of the Following Is an Acceptable Method of Accounting