When accounting for a fixed compensatory share option plan, a company must record which of the following on the date of grant?
A) a journal entry recognizing the common stock issued
B) a journal entry recognizing the compensation expense
C) a memorandum entry explaining the terms of the compensatory share option plan
D) a memorandum entry of the expected annual compensation expense amount

Question

Quizplus · Accepted Answer

On the date of grant, a company typically makes a memorandum entry to document the terms of the compensatory share option plan, as the compensation expense is recognized over the vesting period, not immediately.

When Accounting for a Fixed Compensatory Share Option Plan, a Company