A Study On The Accounting For Equity Incentives

"CAS No.11: Share-Based Payment"is a new accounting standard within China Accounting Standards system. The new standard makes serveal rules about the accounting treatment of recognition, measurement and disclosure of equity incentive, which gives a direction to the enterprises, which apply the equity incentive plans as the guidance not only in theory but in practice.However, as the standand is too principle to exercise and is lack of specific guidelines, a lot of enterprises ill-use the standand or even take advantage of the limitation in it. These problems reduce the comparability of accounting information, distort the profitability of different accounting period and affect the economic decisions of users of financial reports. In front of such problems, anasyzing the status of implementation of CAS No.11, conclusing the key problems and providing guidelines proposed amendment is a matter of great urgency.This dissertation studies and analyzes the main problems existed in accounting treatment of equity incentive, adopting a combining method of qualitative analysis, case studies and statistical data analysis. First of all, it studies several important elements of equity incentive plans, and discusses their effect towards accounting treatment. Secondly, it analyzes the measurement problems of equity instruments, and provides amendment to accounting standands based on the principle of other countries, including how to determine the fair value of equity instruments, how to choose appropriate option-pricing model and how to identify parameters of model. Thirdly, it discusses the effect of grant pattern, vesting conditions, exercise arrangement and changes in the number of incentive staff towards amortized cost of equity incentive, and explains the correct method of amortizing the cost of equity incentive through two cases.The innovation of this dissertation lies in the guidance of practice. It might be useful for the application of the share-based payment transaction.