The following information was taken from the 2019 statement of shareholders' equity for Microsoft (dollars in billions).

INSTRUCTIONS:

a. Explain the nature of stock-based compensation expense.
b. Why would it appear on the statement of shareholders' equity, and on what other financial statement would it also appear?
c. Would you consider stock option expense to be material for Microsoft, and why?
d. When the FASB required that companies expense stock options, many companies complained. Provide some reasons why.

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2019 2018 2017 Net income $39.2 $16.6 $25.5 Stock option expense 4.7 3.9 3.3