The accounting for employee stock options involves the firm debiting _____ and crediting _____ for the amortized amount of the fair value of the stock options on the date of the grant over the requisite service period.

Question

Quizplus · Accepted Answer

The correct accounting treatment for employee stock options involves debiting Compensation Expense and crediting Additional Paid-In Capital (Stock Options) for the amortized amount of the fair value of the stock options on the date of the grant over the requisite service period. This reflects the expense of the stock options as a form of compensation for the employees and the increase in the company's equity from the issuance of the stock options.

The Accounting for Employee Stock Options Involves the Firm Debiting