Question

compensation expense resulting from a compensatory stock option plan is generally group of answer choices recognized in the period of exercise. allocated over the periods of the employee's service life to retirement. recognized in the period of the grant. allocated to the periods benefited by the employee's required service.

Answer 1

Compensation expense from a compensatory stock option plan is allocated over the service period from the grant date to the vesting date, aligning with the periods benefited by the employee's service.

Step-by-step explanation:

The question pertains to how compensation expense is accounted for in relation to a compensatory stock option plan. In such plans, the expense is generally allocated to the periods benefited by the employee's required service. This means it is spread over the service period, typically from the grant date until the vesting period is complete.

This concept is important because it matches the expense recognition with the period in which the employee is providing the service that the compensation is intended to reward.