FASB Issues 2nd Draft on Accounting for Stock Options

The Financial Accounting Standards Board (FASB) has issued another invitation to comment on stock-based compensation. This one asks for your views on accounting for the fair value of employee stock options.

FASB's document provides you with background information in the form of a concise helpful explanation of the similarities of and differences between the international accounting proposal and one of the two types of accounting now permitted in the U.S. Specifically, it compares and contrasts two sets of documents:

  1. An exposure draft of an International Financial Reporting Statement (IFRS) on "Share-based Payment" recently issued by the International Accounting Standards Board (IASB).
  2. The U.S. accounting for stock-based compensation under FASB Statement 123 on "Accounting for Stock-Based Compensation" and related interpretations.

It does not include a comparison of IASB's proposal with the type of accounting permitted under Accounting Principles Board Opinion No. 25 (APB 25) because the intent is to focus solely on fair value accounting instead of the intrinsic value method allowed in APB 25.

Concise, Short and Snappy

Summarizing all the above into one short and snappy title, FASB calls the document, Accounting for Stock-Based Compensation: A Comparison of FASB Statement 123, Accounting for Stock-Based Compensation and Its Related Interpretations, and IASB Proposed IFRS, Share-based Payment.

Altogether, the Invitation to Comment comprises 362 pages divided into nine parts that can be downloaded from FASB's Web site one at a time. In contrast, the IASB's exposure draft entitled, "ED 2 on Share-based Payment" comprises 82 pages divided into three parts that can be downloaded from IASB's Web site one at a time.

Comments on IASB's exposure draft are due by March 7, 2003. Comments on FASB's invitation to comment are due by February 1, 2003. But don't even think about trying to save a few trees by replying solely to FASB's document. The Invitation to Comment explains, "Responding to this Invitation to Comment is not a substitute for responding to the IASB about its Proposed IFRS; the FASB will not be responding to the IASB's Proposed IFRS. The FASB encourages all constituents to participate in the international accounting standard-setting process by responding directly to the IASB."

-Rosemary Schlank

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