Accounting for Equity Compensation, 22nd Ed.
A guide to accounting for stock options, ESPPs, SARs, restricted stock, and other such plans.
By Barbara Baksa
Format
Description
Accounting for equity compensation is one of the most challenging and complex areas of stock plan administration. Written in plain English for non-accountants, this book is a survival guide for understanding the impact of stock compensation on corporate financial statements. Authored by leading expert Barbara A. Baksa, the text provides an overview of the U.S. accounting principles that apply to stock plans, including how to compute and record award expense, dealing with modifications of awards, reconciling tax effects, and considerations for private companies. The final chapter provides a set of examples that apply the rules to various situations. In addition, the text includes key comparisons to International Financial Reporting Standards.
The 22nd edition has been updated for 2026, including an expanded discussion of how employee stock purchase plans affect earnings per share.
Table of Contents
Chapter 1: Introduction: How Did We Get Here?
Chapter 2: Overview of the Standard
Chapter 3: Measurement Date
Chapter 4: Measurement of Expense
Chapter 5: Expense Attribution
Chapter 6: Accounting for Tax Effects
Chapter 7: Financing Exercise Transactions and Tax Withholding
Chapter 8: Modifications
Chapter 9: Business Combinations
Chapter 10: Earnings per Share
Chapter 11: Employee Stock Purchase Plans
Chapter 12: Stock Appreciation Rights
Chapter 13: Private Companies
Chapter 14: Disclosures
Chapter 15: Effective Date and Transition Methods
Chapter 16: Examples
Glossary
About the Author
About the NCEO
Excerpts
From Chapter 11, "Employee Stock Purchase Plans" (footnotes omitted)
11.4.2.1 Offerings That Conclude After the End of the Fiscal Period
When an ESPP offering will conclude after the end of the fiscal reporting period for which EPS is being calculated, it is necessary to estimate both the contributions that will be applied to purchase shares and the purchase price. There are multiple acceptable approaches to determining these estimates, as discussed below. Companies should document their approaches so they can be applied in a consistent manner.
Contributions and Purchase Proceeds
One approach to estimating the contributions is to assume participants contribute the full amount of funds they have committed to under their enrollment agreement, including amounts to be contributed after the conclusion of the fiscal period. Under this approach, the purchase proceeds will include both the purchase price and the average unamortized expense associated with the purchases, since a portion of the contributions relates to future services.
An alternative approach is to assume that only amounts contributed as of the end of the reporting period are applied to the purchase of shares under the ESPP. Under this approach, the assumed proceeds do not include unamortized expense because the contributions do not relate to future services.
Purchase Price
An acceptable approach to estimating the purchase price is to calculate it as if the purchase occurs at the end of the fiscal period. For example, if the plan includes a lookback and a 15% discount, the company would estimate the purchase price to be 85% of the lower of the fair market value at the end of the fiscal period or the offering begin date. Other approaches, such as assuming the purchase occurs at the average price during the period or the “if-converted” method, may be acceptable as well.
