Employee Stock Option Accounting Recognition Of The Problem

As a long-term incentive system to employee, especially manager,Employee Stock Options (ESOs) invented in America in 1960's wasintroduced into China in 1990's, and many listed companies have showedgreat interest in the system. At present, some listed companies have beenmade some experiments on implementing ESOs in mainland of China.This paper mainly discuss the accounting identification of EmployeeStock Options (ESOs), on the fundament of analyzing its economicessence deeply, and come into a conclusion that "profit-sharing view"could reflect the economic essence of ESOs truly and improve the qualityof financial statement, with the perspective that accounting informationserves for the extended decision-makers. This paper includes four parts: â… . Introduction of background â…¡. Employee Stock Options and its economic essence On the basis of understanding the connotation, theoretical fundamentand incentive mechanism of ESOs deeply, I carried on in-depth analysisto its characteristic and economic essence. â…¢. The Study on accounting identification of Employee StockOptions This part is the core of the paper. In order to identify the ESOs, thereis a key problem need to solve: whether should identify and record theESOs in the Accounting Statement? If the answer is "yes", so,how andwhen to identify and record? I, in this part, discussed this problem deeply, and drew a conclusionthat identifying and recording the ESOs with "profit-sharing view" couldreflect its economic essence truly and improve the quality of financialstatement, on the base of research results that the academia makes atpresent, with the perspective that accounting information serves for theextended decision-makers. â…£. Practice of ESOs in our country and analysis on the suitability of"profit-sharing view" Through discussing and studying above, combine the environmentof implementing the ESOs in our country, I analyzed the suitability of"profit-sharing view". Moreover , I believe it is suitable to theenvironment of our country and do good to improve the quality offinancial statement.