Option Expensing
ASC 718
ASC 718 Requirements – Formerly FAS 123R. The calculations required to perform the journal entries and disclosures can be cumbersome. Economics Partners has years of experience, which makes us the right partner for meeting your the requirements.
Granting Stock Options
FASB set forth in 2009 the generally accepted accounting standards for stock option expense. This was formerly FAS 123R and is now ASC 718. As granting employees stock options is viewed as compensation the grant of those options must be done in compliance with IRC 409A. The GAAP accounting for the accrued non-cash expense is done according to ASC 718.
ASC 718 For GAAP Financials
Companies granting stock options or other types of equity-based compensation must apply ASC 718 to have GAAP financials. Private companies that have auditors or want GAAP financials would benefit from engaging a firm like Economics Partners to provide the values, audit-ready calculations, and appropriate disclosures for their financial statements.
Calculation Requirements
The calculation requires tracking of all equity-based compensation grants, calculation of fair market value, determining forfeiture rates, taking into account specific grant terms, along with other key modeling inputs. With years of experience, our team of analysts is the most equipped for providing these services and the right partner for meeting your ASC 718 needs.
