Financial Accounting Blog

Wednesday, March 31, 2004

Stock Options. Let the games begin! On Wednesday FASB published the exposure draft of its proposed standard for how companies should account for stock options that they pay to employees as compensation.
The proposal has two main elements: that publicly traded companies be required to use a fair-value method of valuing options from the date they granted to employees, and that the value be subtracted as a business expense on companies' income statements. At present, the cost of stock options must be estimated only in footnotes that append federal filings, where employers are allowed to use a much simpler technique than fair value to reckon the cost.