Esop
This query is : Resolved
Guest
Guest
(Querist)
10 June 2014
In chapter of employee stock option plan there is journal entry regarding expense in respect of ESOP recognised during the year
employee compensation expense a/c ...DR
employee stock option outstanding A/C
my query is why employee stock option outstanding is credited ?
employee compensation expense a/c ...DR
employee stock option outstanding A/C
my query is why employee stock option outstanding is credited ?
11 June 2014
the idea to debit the employee compensation a/c in the respective year is to follow the matching principle and allow for expense to be booked in the relevant year. However, the stocks are to allotted in a future year.
So to accumulate balance against which shares are to be issued, the credit part is parked to employee stock option o/s A/c. So this act as the company's liability towards its employees against which shares to be issued in future.
So to accumulate balance against which shares are to be issued, the credit part is parked to employee stock option o/s A/c. So this act as the company's liability towards its employees against which shares to be issued in future.
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