Options

Box 1: Actual Proceeds, Hypothetical proceeds,

Box 2: in the money, out of the money, book value, worthless

Box 3: are required for dilution to take place, have an anti-dilutive effect, must represent a meaningful average

Box 4: exercise, market, weekly average,

Box 5: exercise, market, weekly average,

Box 6: exercise, market, weekly average,

When can firms use the treasury stock method? to assume exercise. Under the treasury stock method, the accountant assumes that the from the exercise of options and warrants are used to purchase treasury stock. Of course, the security must be Not only is this a realistic condition, but also it results in incremental shares, which The proceeds received are based on a(n) price that is less than the higher price, the firm can buy back fewer shares than it issues, resulting in incremental shares. price. With the