nnのCPA試験の旅 in Hawaii CPA試験の旅 in Hawaii

Hello again!

by nn_77
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タグ:Stock Option ( 2 ) タグの人気記事



「日本経済新聞 1月31日 朝刊」 より抜粋

Everytime I read such articles reporting the change in the accounting rule for stock option, I always wondered, “Compensation cost accrued as a result of the issuance of Stock option is to be expensed over a period either under the intrinsic value method (APB25) or under the fair value method (FAS123). Why do they report as if such expense recognition had been exempted so far until this change?
(↑「今年から企業に費用としての計上が義務付けられ」って、どーゆーコト? ストックオプションって、以前から費用計上の対象やったんちゃうの?あれェ~?)

But, today, I figured it out on my own! Following is MY understanding. (Disclaimer: Please note that I don’t guarantee the correctness of the description below)
(↑ そうか、わかったゾ!つまり、下記のようなことっちゅうわけやね!!

In the application of APB #25 rule, the compensation cost is the excess, if any, of the quoted market price of the stock on the grant date over the amount an employee must pay to acquire the stock in exercising the option. I wrote "if any." This means if there's no difference between the amount of the option's exercise price and the fair market price of the stock at the grant date, the company doesn't recognize any (deferred) compensation expense in issuing stock option.

Under the fair-value method of FAS123, however, the compensation cost is measured, at the grant date, based on the value of the award, which is computed using an option pricing model. Thus a certain amount of the compensation cost is figured out under FAS123, thus the company always recognize deferred compensation cost, which is expensed over the average remaining service period.

Application of APB#25 has been rather popular among companies because it makes it possible for companies to avoid the recognition of labor expense even when they issue stock options as a kind of bonus.

And this APB#25 application had been accepted by FASB only if the pro forma NI and EPS under FAS123 were disclosed together, until recently.

Such a treatment under APB#25, which doesn't seem to reflect the reality of the transaction, is no longer accepted by FASB, which now permits only FAS123 method, which enforce companies to have compensation expense accrued for the issue of stock options.

This means a big advantage of using Stock Option system is lost now. Companies, including INTEL Co no longer have any reason to pay for their employees' service with Stock options.

Now things are very clear to me.

I haven’t inquired at Anjo School about what they think about the effect of this change to USCPA exam. I’ll do it.
by nn_77 | 2006-02-02 18:45 | >FARE | Comments(0)

SFAS123 vs APB25

Through a course of discussion in vivi-san's blog, kyoroichi-san provided me with a piece of information that it is said that calculating compensation expense drived from Stock Option under the concept APB25 is too obsolete now because FAS123 was revised.

I was very surprised to hear that and serarched for the relevant info about this on the internet, and reached the following page.

Equity-based compensation.

I cannot be sure of the details yet, but it soudns that FAS123 has been revised since 2004 and the intrinsic value method approach under APB25 has become very exceptional.

I have to give an inqury on this to Anjo.

I'm very happy to be able to exchange useful information in this way among USCPA candidate blogger on the internet.

I've gotta keep writing on the blog all the more for this advantage!
by nn_77 | 2006-01-12 02:18 | >FARE | Comments(3)