Explore BrainMass

Stock option controversy

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

How does the controversy over stock option accounting affect the duties of a C.P.A? What are your thoughts on this controversy?

© BrainMass Inc. brainmass.com March 21, 2019, 10:00 pm ad1c9bdddf

Solution Preview

Prior to 2005, there were few "duties" related to stock options except to record them if they were exercised by employees and advise management of the cash flow and profit implications of signing stock option contracts as a way to reduce payroll obligations. After 2005, financial managers and CPAs had to value the stock options in order to record an expense for their issuance. Now, stock options still create a favorable cash flow situation but the profit advantages are gone. In their place there is now an administrative burden ...

Solution Summary

Your response is 338 words and discussed the measurement problem and a suggestion of how the current accounting might be improved for stock option accounting.