Employee stock ownership plans - Includes related article

The AICPA's Accounting Standards Executive Committee has recently issued new rules that change the accounting procedures for employee stock ownership plans (ESOPs). Statement of Position (SOP) 93-6, which takes effect for fiscal years starting after Dec. 15, 1993, requires that the fair value of the ESOP shares to be released be used as basis for measuring employee compensation rather than the cost of the shares to the ESOP. In addition, SOP 93-6 introduces a new accounting regime for dividends and earnings per share. ESOP shares will no longer be considered to be all outstanding so that only the dividends on allocated ESOP shares can be charged to retained earnings. Dividends on unallocated shares are to be charged to compensation if they are paid to plan participants, are treated as debt reduction or accrued interest for accounting purposes, or are used for debt service.

Business
Banking, finance and accounting industries
Employee stock ownership plans
Pensions
Accounting and auditing