CFA Note

Tuesday, March 14, 2006

how to expense the stock option booked under the SG&A item

Two ways stock option expense can be shown:

It is either shown as expense under SG&A in the Income statement. In this case, there will be tax credit under income tax line in I/S

or

alternatively it is not shown on I/S and shown as pro-forma disclosure in the footnotes. In this case, no tax credit in I/S.

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