View the step-by-step solution to: How do the provisions of SFAS No. 123(R) differ from the bill

How do the provisions of SFAS No. 123(R)...
This question was answered on Mar 24, 2010. View the Answer
How do the provisions of SFAS No. 123(R) differ from the bill introduced by members of Congress (Dreier and Eshoo), which would require expensing for options issued to only the top five officers in a company? Which approach do you think would result in more useful information? (Focus on comparability.)
LT wk2 CA16.4.doc

CA164 (Stock Compensation Plans)The following two items appeared on the Internet
concerningthe passage of SFAS No. 123(R).
WASHINGTON, D.C.February 17,2005CongressmanDavidDreier(RCA),ChairmanoftheHouse

RulesCommittee, and Congresswoman Anna Eshoo (DCA) reintroducedlegislation today that
will preserve broadbased employee stock option plans and give investors critical information
they need tounderstand how employee stock options impact the value of their shares.
Last year, the U.S. House of Representatives overwhelmingly voted for legislation that would
haveensured the continued ability of innovative companies to offer stock options to rankandfile
employees, Dreier stated. Both the Financial Accounting Standards Board (FASB) and the
Securities andExchange Commission (SEC) continue to ignore our calls to address legitimate
concerns about the impact of FASBs new standard on workers ability to have an ownership
stake in the New Economy, andits failure to address the real need of shareholders: accurate and
meaningfulinformationaboutacompanys use of stock options.
In December 2004, FASB issued a stock option expensing standard that will render a huge
blowto the 21st century economy, Dreier said. Their action and the SECs apparent lack of
concern forprotecting shareholders, requires us to once again take a firm stand on the side of
investors and economic growth. Giving investors the ability to understand how stock options
impact the value of theirshares is critical. And equally important is preserving the ability of
companies to use this innovativetool to attract talented employees.
Here
We Go Again! by Jack Ciesielski
(2/21/2005,

http://ww
w.accountingobserve
r.com/blog/2005/02/he wegoagain) On February 17,
re
Congressman David Dreier (RCA), and Congresswoman Anna Eshoo(DCA), officially entered
Silicon Valleys bid to gum up the launch of honest reporting of stock option compensation:
Theycosponsoredabilltopreservebroadbasedemployeestockoptionplansand give investors
critical information they need to understand how employee stock options impactthe value of
their shares. You know what critical information they mean: stuff like the stock com
pensation for the top five officers in a company, with a rigged value set as close to zero as
possible.Investors crave this kind of information.Other ways the good Congresspersons want
to help in vestors: The bill also requires the SEC to study the effectiveness of those
disclosures over three years, during which time, no new accounting standard related to the
treatment of stock options could be rec ognized. Finally, the bill requires the Secretary of
Commerce to conduct a study and report to Congress on the impact of broadbased employee
stock option plans on expanding employee corporateownership, skilled worker recruitment and
retention, research and innovation, economic growth, andinternational competitiveness.
Its the old four corners basketball strategy: stall, stall, stall. In the meantime, hope for
regimechange at your opponent, the FASB.

Instructions:

Howdo theprovisions ofSFASNo.123(R)differ fromthe billintroduced bymembers of Congress(Dreier and Eshoo), which
would require expensing for options issued to only the top five officersin a company? Which approach do you think would
result in more useful information? (Focus oncomparability.)

Dear Student, Please find the solution attached. View the full answer

LT wk2 CA16[1].4.doc

CA164 (Stock Compensation Plans)The following two items appeared on the Internet
concerningthe passage of SFAS No. 123(R).
WASHINGTON, D.C.February...

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors and customizable flashcards—available anywhere, anytime.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access or to earn money with our Marketplace.

    Browse Documents
  • 890,990,898

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
  • 890,990,898

    Flashcards

    Browse existing sets or create your own using our digital flashcard system. A simple yet effective studying tool to help you earn the grade that you want!

    Browse Flashcards