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Companies Get Accounting Clarity on Valuing Stock Options

Nov. 11, 2019, 8:09 PM

Companies that offer their customers stock options as incentives to do business with them now have accounting guidance on the timing to measure the value of these deal sweeteners.

The Financial Accounting Standards Board on Nov. 11 published a narrow update to U.S. accounting rules, clarifying that businesses must measure value at the grant date of the stock option. That is the date at which the business and the customer “reach a mutual understanding of the key terms and conditions of the share-based payment award,” FASB said.

The value of stock options can fluctuate daily, so timing is a key ...