oa Meditari : Research Journal of the School of Accounting Sciences - Should the IASB consider exercise date accounting for outstanding employee share options?
|Article Title||Should the IASB consider exercise date accounting for outstanding employee share options?|
|© Publisher:||University of Pretoria|
|Journal||Meditari : Research Journal of the School of Accounting Sciences|
|Author||Z.Y. Sacho and J.G.I. Oberholster|
|Publication Date||Jan 2005|
|Pages||89 - 106|
|Keyword(s)||Employee share option, Equity, Exercise date, Grant date, Liability and Opportunity cost|
This article investigates the most appropriate accounting treatment for expensing the fair value of employee share options (ESOs) in financial statements. The debate centres around whether the grant date or the exercise date is the most appropriate date for determining the value at which the ESOs are eventually accrued within the financial statements. After examining accounting models for each of the above measurement dates, the article concludes that exercise date accounting best reflects the economic substance of the ESO transaction. Therefore, the IASB should consider revising its definition of equity to encompass only existing shareholders, leaving all other financial obligations to be classified as liabilities.
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