Financial Accounting Blog

Monday, March 29, 2004

Stock-Option Accounting. The Star Ledger argues that incredible inaccuracies would result from companies being forced to deduct stock-option costs from earnings.
Companies now don't have to record the cost of options as an expense on their income statements. Instead, they must include the potential cost in a footnote. The Financial Accounting Standards Board, the U.S. accounting rulemaker, tried a decade ago to mandate expensing from earnings, but it eventually backed down to pressure from Congress and the technology industry. Now, because of all the recent corporate scandals, the FASB is taking on the issue again and is expected next week to release a draft of its new rules.