Where will Share options outstanding account be shown in its financial statements by the company?

Reserves and Surplus

The correct answer is option 2- Reserves and Surplus.

Share options outstanding account has been recognised as a separate item under ‘Reserve and Surplus’. ICAI’s Guidance Note on Accounting for Employee share based payments requires a credit balance in the ‘Stock option outstanding Account’ to be disclosed in the balance sheet under separate heading’ between share capital and reserves and surplus as a part of shareholders fund.