Under a (non-compensatory) employee stock option plan (ESOP), when an option is sold to an employee, the employer debits Cash and credits
A) Common Shares.
B) Stock Option Payable.
C) Contributed Surplus - Stock Options.
D) Stock Option Revenue.

Question

Quizplus · Accepted Answer

Under a non-compensatory employee stock option plan (ESOP), when an option is sold to an employee, the employer records the transaction by debiting Cash for the amount received and crediting Contributed Surplus - Stock Options. This account reflects the equity component of the transaction, recognizing the value of the options granted as part of the company's equity, but not as issued share capital (Common Shares) or as a liability (Stock Option Payable) or revenue (Stock Option Revenue).

Under a (Non-Compensatory) Employee Stock Option Plan (ESOP), When an Option