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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs -- Ignore unavailable to you. Want to Upgrade?

To: Exacctnt who wrote (259)	8/23/2002 6:29:57 PM
From: rkral	Read Replies (1) \| Respond to of 786

Exaccnt, re FAS 123 option expensing terms >>If options were to be expensed, the operational part, then an Options Expense would be debited and probably some type of an Equity Option Compensation account would be credited.<< With terms from FAS 123 in double quotes: "Illustration 1 - Fixed Stock Option" debits "Compensation Expense" and credits "Additional paid-in capital - stock options". I assume the former ends up in the Income Statement, the latter in the Balance Statement. The credit makes it appear that FASB considers the option grant a financing activity. Do you agree? FAS 123 continues: "To recognize compensation cost" debit "Deferred tax asset" and credit "Deferred tax expense". Would you please provide your accounting definition of "recognize"? Something to do with taxes? >>Scratching my head about this statement.<< My statements about the "employee purchasing the stock option" was my way of describing one of two imputed cash flows (my description) that are embedded in the option grant event IMO. Ron