Accounting For Stock Options Essay Sample

Accounting For Stock Options Essay Sample

… investment went south and had an unrealized holding loss of $1.3 million. Stable Mable had to classify and establish just how to adjust their financial statements for the investment’s losses. Their options were to account for the losses as realized losses or to exclude the losses from earnings as a separate component of shareholders’ equity.

In addition, decisions made now could effect future financial statements …

… objectives and conventions that govern how financial statements are prepared.

A review of Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities (Issued 5/93):

Statement 115 addresses accounting and reporting for investments in equity securities and those investments are to be classified in categories:

Debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as ‘held …

… a false reality.

An “Impairment Charge” is a new term for writing off worthless goodwill. While impairment charges have gone relatively unnoticed, they will get more attention as the weak economy and faltering stock market force more charge-offs. This will also increase concerns about corporate balance sheets.

Individuals need to be aware of these risks and factor them into their investing decision-making process.

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