Question

Maggie Company issued options valued at $1 million to one of its executives that are contingent on the company achieving a 10% increase in sales revenue within the next 12 months. The company believes that it is not possible that this target will be achieved. After 6 months, the company estimates that it is probable that the target will be achieved. Based on this new estimate, the company must ____________.

Answer 1

Based on the new estimate, the company must reassess its decision about the options issued to the executive and potentially fulfill the contingent requirement if the target is met.

Step-by-step explanation:

Based on the new estimate that the company believes it is probable to achieve a 10% increase in sales revenue within the next 12 months, the company must reassess its decision about the options it issued to the executive. Since the target is now deemed achievable, the company may need to revalue the options and potentially fulfill the contingent requirement if the target is met.