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Valley Corporation established a stock option plan for its officers and key employees this year. Because the options granted have a higher option price than the stock’s current market price, the company has not recognized any cost for the options in the financial statements. However, a note to the financial statements includes all required disclosures. Required: a. Do you believe that Valley’s management has appropriately accounted for the stock option plan? Explain your answer.

Respuesta :

anthougo

I believe that Valley's management should have used the services of a business valuation expert to establish the correct compensation cost that should be attributed to the stock option plan for its officers and key employees.

With the expert's valuation, the cost of the Employees Option Plan will be recognized in the financial statements as it should. The cost of the option plan is the difference between the option price and the exercise price.

Thus, Valley Corporation must determine the correct cost of the option plan and recognize it in the financial statements for the year.

Learn more: https://brainly.com/question/18096767

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