Accounting For Employee Stock Options With Service, Performance, And Market Conditions

Abstract

The accounting for employee stock options has long been a subject of debate among executives, regulators, and standard-setters. The accounting standard passed by the Financial Accounting Standards Board (FASB) in 2004 allows for more creative design of these types of options. In this case, students learn about employee stock options with service, performance, and market conditions. They also learn how to value options with these conditions, and how to report them on company income statements under the new accounting guidance.