Which one of the following statements is not true with regard to employee compensatory share option plans? When a stock option is exercised under a compensatory stock option plan, the newly issued common stock is recorded at the exercise price and the value of the options at the grant date. When stock warrants are issued under a noncompensatory stock option plan, no formal journal entry is required to record the stock warrants. O When a stock option is exercised under a compensatory stock option plan, the newly issued common stock is recorded at the exercise price and the previously recorded value of the warrants. For federal income tax purposes, any gains resulting from stock options earned by employees are taxed at ordinary income tax rates.

Which one of the following statements is not true with regard to employee compensatory share option plans? When a stock option is exercised under a compensatory stock option plan, the newly issued common stock is recorded at the exercise price and the value of the options at the grant date When stock warrants are issued under a noncompensatory stock option plan, no formal journal entry is required to record the stock warrants. When a stock option is exercised under a compensatory stock option plan, the newly issued common stock is recorded at the exercise price and the previously recorded value of the warrants. For federal income tax purposes, any gains resulting from stock options earned by employees are taxed at ordinary income tax rates