Employee Stock Options

FSA Book P. 150 “FAS 123® requires recognition of compensation cost over the requisite service period…” Equity Book P. 119 “Currently IAS, as well as most national GAAP including the U.S. GAAP, does not require that an expense be recorded for the value of options granted to employees.” Obviously this is a contradiction… I assume that the reasoning behind this error is that the equity section seems to have been written in 2002, while FAS 123® was enacted in Dec. 2005. Am I interpreting this incorrectly? It would be nice if CFAI included some kind of footnote for the second statement… This is the kind of stuff that drives me crazy…

2002? Wow…

JoeyDVivre Wrote: ------------------------------------------------------- > 2002? Wow… Actually, the copyright date is 2004 for this section. All of the sources quoted in the reading are from 2002 though. Apparently this is a bit dated.

Yep - FAS 123 ® is the rule now and it requires expensing.

Thanks for the confirmation. I wasted 1/4 of my time tonight trying to figure that out.

McLeod, I noticed this same inconsistency in December and agree it’s a misleading oversight by CFAI. http://www.analystforum.com/phorums/read.php?12,642860,642860#msg-642860

Ha, you would think that someone in CFAI would have noticed that error at some point over the past three years. To make things worse, reading 25 isn’t exactly clear either. This is one case where Schweser seems to do a much better job explaining things.