The Financial Accounting Standards Board (FASB) has released Statement No. 148 on "Accounting for Stock-Based Compensation—Transition and Disclosure." This statement provides alternative methods of transition for companies that choose to switch to the fair value method of accounting for stock options.
Statement 148 also makes changes in the disclosure requirements for stock-based compensation, regardless of which method of accounting is chosen. Under the new standard, companies must report certain types of information more prominently and in a more user-friendly format in the footnotes to the financial statements, and this information must be included in interim as well as annual financial statements. In the past, companies were required to make pro forma disclosures only in annual financial statements.
The transition guidance and annual disclosure provisions of Statement 148 are effective for fiscal years ending after December 15, 2002, with earlier application permitted in certain circumstances. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002.
To obtain a copy of Statement No. 148, call the FASB's Order Department at 800-748-0659 or place an order via FASB's Web site.