Question 3: True/False

a) Companies should recognize a gain in the income statement if the selling price of the treasury stock is higher than the original purchase price.

b) A company should recognize an estimated liability from a loss contingency on the balance sheet, if the likelihood is reasonably possible.

c) If an employee fails to exercise a stock option before its expiration date, the company should decrease compensation expense.

d) A short-term obligation can be excluded from current liabilities, as long as the company intends to refinance it on a long-term basis.