Research Of Accounting Recognition And Measurement Of Share Option

During the past a few years, the stock-based employee compensation plans have been gradually used by some Chinese listed companies. But some problems emerged gradually during this change. One of the most serious problems is how to establish financial accounting and reporting standards for company's stock-based compensation plans.In U.S., accounting standards for employee stock options have developed for decades. Among these accounting standards, APB Opinion No.25 and FASB statement 123 are most important rules. This article first introduces American's main stock option accounting rules, including two ways to account for employee stock options-the intrinsic value based method and the fair value based method. On the basis of these introductions, the author estimates several major accounting methods for stock options used by Chinese companies, and pointed out the mistake or weakness of these accounting methods. Then contra posing the fact of Chinese economic, the author tries to find the key in designing a new accounting mechanism about stock option's accounting measurement and recognition in China, referencing the accounting basis theory-the basic accounting concepts about cost and account entity assumption. Finally give two examples to ensure the theory mentioned.The author states the key to designing the mechanism about stock option's measurement and recognition is to solve four core problems, including if the stock options must be recognized as compensation cost; if any, how to measure their value; and if the elements of stock option changed, it is necessary to adjust the changes, or re-recognition, etc.Finally, the author summarizes recognize the stock option compensation cost according to the exercising ways of stock option by the employee. Not all the stock options should be recognized as compensation cost. Contrarily, not all stock options should not be recognized as compensation cost. If the elements of stock option plan have changed, it is necessary to re-recognize the value of the stock option, and the value way should be the fair value based method.