Stock options are not an expense

FASB's exposure draft on stock options is not an example of even-handed standard-setting. The FASB's attempt to extend expense accounting to all fixed stock options has some serious problems, the primary one of which is that fixed stock options simply do not easily fit into the expense mol...

Full description

Saved in:
Bibliographic Details
Published in:Financial executive (1987) 1994-07, Vol.10 (4), p.12
Main Authors: Wolk, Harry I, Rozycki, John J
Format: Magazinearticle
Language:English
Subjects:
Accounting
Accounting firms
Accounting policies
Accounting procedures
Asset acquisitions
Capital distributions
Compensation
Decision making
Discount rates
Employees
Employment agencies
Equity
Expenditures
Exposure drafts
FASB exposure drafts
Laws, regulations and rules
Present value
Prices
Proprietary
Stochastic models
Stock options
Stock prices
Stock rights
Stockholders
Tax allocation
Taxation
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:FASB's exposure draft on stock options is not an example of even-handed standard-setting. The FASB's attempt to extend expense accounting to all fixed stock options has some serious problems, the primary one of which is that fixed stock options simply do not easily fit into the expense mold. Another problem is stock-option capitalization and amortization. Evidence exists that companies adopt almost 1/2 of all stock option plans without decreasing their other forms of compensation. So the FASB's position that options displace cash remuneration is questionable. For these reasons, the FASB should focus on accounting for similar transactions in a similar fashion and allow for differences only where real differences exist.
ISSN:0895-4186