Accounting for Stock Options

In December 2004, a decade after bending to Congressional pressure and backing away from requiring the expensing of options on financial statements, FASB issued a revised standard to recognize stock-option compensation as an expense on income statements. Many in Congress may try to thwart the propos...

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Bibliographic Details
Published in:The CPA journal (1975) 2005-08, Vol.75 (8), p.30
Main Authors: Apostolou, Nicholas G, Crumbley, D Larry
Format: Article
Language:English
Subjects:
Accounting policies
Annual reports
Business expenses
Compensation
Earnings per share
Fair value
FASB statements
Financial accounting standards
Financial statements
High tech industries
International accounting standards
Revisions
SFAS 123
Stochastic models
Stock options
Stock prices
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Summary:In December 2004, a decade after bending to Congressional pressure and backing away from requiring the expensing of options on financial statements, FASB issued a revised standard to recognize stock-option compensation as an expense on income statements. Many in Congress may try to thwart the proposal before it becomes effective. A bill by Representative Richard Baker of Louisiana that would require expensing the cost of stock options for only the top five executives of a company has drawn the support of those groups still resolutely opposed to expensing. This time, however, FASB is likely to prevail. Investors are demanding tougher accounting standards, and the International Accounting Standards Board (IASB) has already passed rules requiring the expensing of options. Many large U.S. corporalions have already voluntarily agreed to expense options. Finally, there is more concern about, and less support for, Congressional interference in FASB's standards-setting process.
ISSN:0732-8435