When accounting for a fixed compensatory share 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 share 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 share option plan is made on the grant date to document the details of the plan, but no journal entry is made until the compensation expense is recognized over the vesting period.

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