Under the fair value method, if an executive does not exercise a stock option and it is allowed to lapse, the account - Paid-in Capital Share Options - is debited. What account is credited?
A) Additional Paid-In Capital from Expired Share Options
B) Compensation Expense
C) Gain from Expired Share Options
D) Deferred Compensation

Question

Quizplus · Accepted Answer

Under the fair value method, when an executive does not exercise a stock option and it is allowed to lapse, the account credited is "Additional Paid-In Capital from Expired Share Options." This reflects the reversal of the amount initially credited to equity for the fair value of the options that were not exercised.

Under the Fair Value Method, If an Executive Does Not