Question

Stock bonus plans require valuation. Which is true?

1.) Valuations are required to inform participants of the stock's value.
2.) Independent appraisers are required for closely held corporations.

a.) 1 only
2.) neither 1 nor 2
c.) both 1 and 2
d.) 2 only

Answer 1

Both statements in the question are true: Valuations are essential in providing stock value information to participants, and independent appraisals are commonly required for closely held corporations to determine share value fairly.

Step-by-step explanation:

Stock bonus plans are a form of employee benefit plan that use the company's stock to contribute to employees. Regarding the statement 'Stock bonus plans require valuation,' the options presented pose two concepts:

1. Valuations are required to inform participants of the stock's value.
2. Independent appraisers are required for closely held corporations.

Both statements are true. Valuations provide critical information regarding the value of the stock, which is essential for participants to understand the worth of their stock bonuses. For closely held corporations, which lack a public market to readily determine the value of their shares, independent appraisals are typically necessary to ensure fairness and compliance with regulations.