A company may issue shares to its employees or outside parties that are intended to be compensation for past or future services rendered. These payments can take many forms, such as stock grants, stock options, warrants, and discounted employee stock purchase plans. Accounting for Stock-Based Compensation describes the treatment of equity-based compensation that is paid to employees and outsiders, addressing how to account for each of these types of stock compensation, as well as similar arrangements. The valuation and expense recognition for these stock awards is discussed, along with the related concepts of employee stock ownership plans and employee share purchase plans. In addition, the views of the Securities and Exchange Commission in regard to this topic are summarized.
Upon successful completion of this course, participants will be able to:
- Recognize the basic concepts of stock-based compensation, such as the implicit service period, the derivation of compensation costs, and the classification of an employee.
- Identify the accounting for unused stock options.
- Specify the methods used to derive the fair value of stock-based compensation.
- Recognize the reasons for creating an employee stock ownership plan.
- State the rules that qualify an employee share purchase plan for special accounting treatment.
- Specify the positions taken by the Securities and Exchange Commission related to stock-based compensation.
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