The computation of the additional shares to be issued on the exercise of stock options assumes that the firm would repurchase common shares on the open market using an
Amount equal to the sum of all the following except:
A) any cash proceeds from such exercise
B) net incremental shares issued
C) any unamortized compensation expense on those options
D) any tax benefits that would be credited to additional paid-in capital

Question

Quizplus · Accepted Answer

The computation assumes that the firm would repurchase common shares on the open market using the amount equal to the sum of cash proceeds from exercise, any unamortized compensation expense on those options, and any tax benefits that would be credited to additional paid-in capital. It does not include net incremental shares issued as those shares would already be outstanding after the exercise of stock options.

The Computation of the Additional Shares to Be Issued on the Exercise