On Thursday, the Financial Accounting Standards Board (FASB) officially released its final rule on expensing stock options.
The rule, announced in Norwalk, Conn., requires U.S. companies to disclose more clearly the cost of options on their income statements, rather than relegate those figures to footnotes. Public companies must expense options in the first financial reporting period after June 15, 2005. For private companies and small business issuers, the effective date will be Dec. 15, 2005.
"Recognizing the cost of share-based payments in the financial statements improves the relevance, reliability and comparability of that financial information and helps users of financial information to understand better the economic transactions affecting an enterprise," Michael Crooch, a FASB board member and collaborator on the rule-making process, said in a statement.
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