FASB Awaits "Thank You" from Microsoft Employees

If a company awards stock options and later reprices those options, FASB rules require that the repriced options must be charged against profits. In a small company where the value of the options is minimal, this might not make much of a difference to the bottom line. But if you happen to be Microsoft, and you're looking at having to offset your profits with a $30 billion adjustment over the seven-year life of the options, you may want to rethink the repricing strategy.

Microsoft issued options to its employees last summer, assuming the price of its stock would continue to rise. Instead, Microsoft's stock value dropped, the option price exceeded the market value of the stock, and employees weren't happy.

Instead of repricing the options, which would have resulted in the charge-off against profits, Microsoft issued new options. Issuing the new options circumvented the FASB charge-off rule. Microsoft is happy, the employees are happy, life is good...

You may like these other stories...

PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...
Anti Burger Kings: Seven US companies shrinking tax the old-fashioned wayBurger King’s decision to combine with Canadian donut shop Tim Hortons is renewing controversy over the lengths some US companies will go to...
Read more from Larry Perry here and in the Today's World of Audits archive.Since the AICPA's Financial Reporting Framework for Small- to Medium-sized Entities (FRF for SMEs) and some other financial reporting...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.