Stock option expensing is a method of accounting for the value of share options, distributed as incentives to employees, within the profit and loss reporting of a listed business. On the income statement, balance sheet, and cash flow statement say that the loss from the exercise is accounted for by noting the difference between the market price (if one exists) of the shares and the cash received, the exercise price, for issuing those shares through the option.
Opponents of considering options an expense say that the real loss- due to the difference between the exercise price and the market price of the shares- is already stated on the cash flow statement. They would also point out that a separate loss in earnings per share (due to the existence of more shares outstanding) is also recorded on the balance sheet by noting the dilution of shares outstanding. Simply, accounting for this on the income statement is believed to be redundant to them.
Note: Currently, the future appreciation of all shares issued are not accounted for on the income statement but can be noted upon examination of the balance sheet and cash flow statement.
Other articles related to "stock option expensing, expensing, stock options":
... Grant Thornton was the first accounting firm to support expensing of stock options when they published a comment letter supporting FASB’s conclusions on Share-Based Payment ...
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