medium · Investment Banking accounting
Which statement best describes the link between SBC and Additional Paid-In Capital (APIC) on the Balance Sheet?
- APIC acts as a placeholder for the fair value of employee services received but not yet settled in issued shares.
- APIC decreases when SBC is expensed to balance the decrease in Retained Earnings during the period.
- SBC flows into Retained Earnings directly through the Income Statement and bypasses APIC entirely on the Balance Sheet.
- APIC is only affected once employees actually pay the strike price in cash to exercise their vested stock options later on.
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