The value assigned to stock warrants for a noncompensatory stock option plan is calculated as
A)the excess of the quoted market price over the option price for the specified number of shares on the measurement date
B)the excess of the fair value of the employee services over the cash compensation paid over the required service period
C)zero
D)the excess of the quoted market price over the option price for the specified number of shares on the date that the options are exercised

Question

Quizplus · Accepted Answer

For a noncompensatory stock option plan, the value assigned to stock warrants is calculated as zero because these plans are typically designed not to provide additional compensation to employees but rather to allow them to participate in the equity of the company under terms that are generally available to all shareholders.

The Value Assigned to Stock Warrants for a Noncompensatory Stock