Stock Options Accounting - Reading 40

CFA Level II
#1

Page 119 of CFAI Volume 4 indicates that stock options need not to be expensed but only disclosed in footnotes. This is obviously outdated info as stock options are required to be expensed starting 2007. My questions would be, which should I follow? The up-to-date accounting rules or the historic accounting rules of which the text is based on? BTW, I have not yet gone through the accounting readings yet; thought it would be much easier to get a head start in areas that I am most familiar with.

#2

vitaminc Wrote: ------------------------------------------------------- > > My questions would be, which should I follow? The > up-to-date accounting rules or the historic > accounting rules of which the text is based on? Please don’t take this the wrong way but sit down read this question aloud ten times and the answer should come to you.

#3

CFA will test on what’s on the text … if the material is outdated, it’s unlikely that they will test something that does not apply anymore. Having said that, at the end of the day, they can do whatever they want.

#4

I didn’t pick up the discrepancy in the equity study session, but FSA page 147 has it right. The new standard, FAS 123®, requires public co’s to start expensing ee stock options…Jan 2006 for for calendar yr co’s. I can’t imagine they would test the outdated info in the equities section.

#5

planner Wrote: ------------------------------------------------------- > > I can’t imagine they would test the outdated info > in the equities section. …but they won’t test information that was NOT in the equities section…

#6

eriqnoodle Wrote: ------------------------------------------------------- > planner Wrote: > -------------------------------------------------- > ----- > > > > I can’t imagine they would test the outdated > info > > in the equities section. > > > …but they won’t test information that was NOT in > the equities section… It is in the equities study session as the original poster points out. Volume 4 - Equity Concepts and Techniques (Asset Val & Equities) page 119. It relates to LOS 40b - IAS vs US GAAP.