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FASB issues Statement no. 148, Accounting for Stock-Based Compensation—Transition and Disclosure ( ), amending Statement no. 123, Accounting for Stock-Based Compensation. The new guidance offers two additional methods of transition for companies voluntarily planning to use the fair value method of accounting for options-related expenses. Statement no. 123 had required such entities to recognize expense for the fair value of only the options they awarded after adopting that method. But this caused those companies’ recognized compensation expenses to vary widely from the levels they had disclosed previously. Statement no. 148 enables companies to avoid such fluctuations by recognizing expense for the fair value of their past and present stock-based compensation awards as soon as those entities convert to the fair-value method. The statement also requires companies not using that method to improve the clarity and prominence of their footnote disclosures about the pro forma effect using the fair-value method would produce. In addition, businesses now must include this information in their interim, as well as annual, reports. The statement’s transition guidance and annual disclosure provisions are effective for fiscal years ending after December 15, 2002, with earlier application permitted in certain circumstances. Its interim disclosure requirements are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. (See Official Releases, page 86.) Statement no. 148 is available from FASB at 800-748-0659 or at .


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