Advisory: Potential Changes in Accounting for Stock Options
- Topics:
- Compensation Guide
- Source:
- Clark Consulting
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Overview: Investor concerns, a likely pronouncement by the International Accounting Standards Board (IASB) and the six-year-old stance of the Financial Accounting Standards Board (FASB), have combined to create renewed interest in accounting for stock options and other equity incentives via the "fair value method" rather than the current "intrinsic value method" authorized under U.S. More than 20 U.S. firms have adopted or have announced that they will adopt fair value accounting, irrespective of whether there is a regulatory change. A change in accounting treatment for stock options could have a number of significant implications. Of potentially more powerful value, however, is that – under current accounting treatment – companies do not have to record expenses and can benefit from a tax deduction for the company. However, the stance of a new accounting standards board and the influence of certain institutional and individual investors, have caused many firms to consider changes in option accounting.
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Format: PDF | Size: 269KB | Date: Aug 2002 | Pages: 15
