When accounting for a fixed compensatory stock option plan, a company must make which of the following on the date of grant?
A)journal entry recognizing the common stock issued
B)journal entry recognizing the compensation expense
C)memorandum entry explaining the terms of the compensatory stock option plan
D)memorandum entry of the expected annual compensation expense amount

Question

Quizplus · Accepted Answer

A memorandum entry explaining the terms of the compensatory stock option plan is made on the date of grant to document the plan's details, but no journal entry for compensation expense or common stock issued is recorded until the conditions for recognition are met.

When Accounting for a Fixed Compensatory Stock Option Plan, a Company