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In addition to FAS 123(R) (now called ASC Topic 718), requiring mandatory expensing of options based on the fair market value at grant, under this accounting statement companies need to record the expected tax deduction benefits from the stock grant. This creates a deferred tax asset because it is not yet deductible for income tax purposes at grant. When the company recognizes the compensation expense (e.g. exercise for options and vesting for restricted stock), it then makes adjustments based on the actual tax benefits.
For more on this topic, see an article in Journal of Accountancy.
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