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    Retained Earnings - Recording an Expense

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    Under the disclosure provisions of SFAS No.123, the estimated stock option expense for 2006 would be $15,500 for W Co.. When the company records this expense:

    A) retained earnings account has no effect
    B) the equity on b/s has no effect
    C) the total assets increase by 15,500
    D) the capital decreases by 15,500

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    https://brainmass.com/business/accounting/retained-earnings-recording-an-expense-500306

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    D) the capital decreases by 15,500

    It decreases capital because ...

    Solution Summary

    This solution explains the correct answer for W Co. under the disclosure provisions of SFAS No. 123.

    $2.19

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