search query: @freeterm MODEL OF THE REPORTING ENTITY / total: 1
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| Author: | Forker, J. |
| Title: | Models of the reporting entity and accounting for equity-based consideration |
| Journal: | Accounting and Business Research
2000 : WINTER, VOL. 31:1, p, 3-17 |
| Index terms: | SHARE INCENTIVE SCHEMES |
| Freeterms: | EQUITY-BASED CONSIDERATION MODEL OF THE REPORTING ENTITY |
| Language: | eng |
| Abstract: | Conventional accounting practice for equity-based consideration (EBC)and, in particular for employee share schemes (ESS), recognises an expence for cash-based settlement but not for settlement by the issue of new shares. In principle, expense recognition based on a choice of method of settlement is inconsistent and, in the case of ESS, undermines managerial accountability by understanding pay, overstating profit and weakening the link between reported profit and the change in the wealth of existing shareholders. The choice of a model of the reporting entity (MRE) provides the conceptual basis to address issues in accounting for EBC. In the light of the controversy over the FASB's recommendation for partial expense recognition based on the date of grant fair value of EBC, and the recent decisions of the ASB and G4+1 to consider how to account for EBC, this paper reviews the role of MRE in expence recognition for EBC. |
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