Question: Essay on Stock Compensation. Note: you do not need to answer in complete sentences; short phrases are acceptable (both here and on the exam).
1. What accounting standard in 1970 caused stock options become the primary form of non-cash compensation issued by companies?
2. Why did companies choose stock options over restricted stock from 1970 to 2004?
3. What accounting standard in 2004 caused stock options to decline as the primary source of non-cash compensation? Why?
4. Does compensation expense from stock options meet the definition of an expense as discussed in SFAC 6? Why?
5. Do you think compensation expense from stock options should be recognized as an expense? Choose one position, and support it.