Exam CIS-SAM topic 6 question 153 discussion

Manage Microsoft Office 365 reserved licenses to accurately calculate annual true-up cost. Create reserve entitlements from existing Microsoft Office 365 subscription entitlements to add licenses to your subscription. The total cost of the reserved entitlement is included in the calculations for true-up cost and total spend on the product. Pay for the new licenses during your true-up process; after true-up, the reserved licenses are automatically converted into regular licenses.

The answer is A - they are automatically converted to regular licenses This is on page 292 in the SAM book from the SAM course.