Sterling & Price Entity offered its top executives a stock option package that vests when share prices hit $145 in the next two years. They record the applicable expenses, but the shares never vest during the two years. Even though no share options vest, the expenses cannot be reversed.

Question

Quizplus · Accepted Answer

The expenses related to stock options that do not vest are generally not reversed because they reflect the fair value of the employee services received in exchange for the grant of the option, as recognized over the vesting period, regardless of whether the vesting condition is ultimately met.

Sterling & Price Entity Offered Its Top Executives a Stock