When recognizing compensation under a stock option plan, unanticipated forfeitures are treated as:
A) A change in accounting principle.
B) A loss.
C) An income item.
D) A change in estimate.

Question

Quizplus · Accepted Answer

Unanticipated forfeitures are treated as a change in estimate, as they were not originally factored into the estimated compensation expense. Therefore, the change in estimate should be recognized in the period in which the forfeitures occur.

When Recognizing Compensation Under a Stock Option Plan, Unanticipated Forfeitures