Possibilities for recording liability
Course:- Cost Accounting
Reference No.:- EM13298393

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I have a liability that was created by the exercise of a put option on a warrant. The warrant had a strike price of $0.001 and the put has a value of $2.7M. The put option first was available in April 2007 and was exercised in April 2009. In recording the liability, I categorized it as an expense.

Although the liability and corresponding expense should have been accrued since April 2007, it was not recognized until April 2009. My question is, was it proper to record the liability as an expense when the entry was made?

Are there any other possibilities for recording this liability?

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