Difference between revisions of "FAR 31.205-6(i) - Stock Options, Stock Appreciation Rights, and Phantom Stock Plans."
(Created page with " == Stock Options, Stock Appreciation Rights and Phantom Stock Plans == *(i) Compensation based on changes in the prices of corporate securities or corporate security ownershi...") |
|||
(31 intermediate revisions by one user not shown) | |||
Line 1: | Line 1: | ||
+ | {{Cost Allowability | ||
+ | |Regulation Source=CAS, FAR | ||
+ | }} | ||
+ | == Stock Options, Stock Appreciation Rights and Phantom Stock Plans== | ||
− | == | + | ==Allowable or Unallowable?== |
+ | ===Unallowable=== | ||
+ | However, in Rare instances, Allowable under Accounting Principles Board (APB) 25 rules. [[See APB 25 - Accounting for Stock Issued to Employees]] | ||
+ | |||
+ | ==FAR 31.205-6(i) Citation<ref>https://acquisition.gov/far/currenthtmlSubpart%2031_2.html#wp1095552</ref> == | ||
*(i) Compensation based on changes in the prices of corporate securities or corporate security ownership, such as stock options, stock appreciation rights, phantom stock plans, and junior stock conversions. | *(i) Compensation based on changes in the prices of corporate securities or corporate security ownership, such as stock options, stock appreciation rights, phantom stock plans, and junior stock conversions. | ||
**(1) Any compensation which is calculated, or valued, based on changes in the price of corporate securities is unallowable. | **(1) Any compensation which is calculated, or valued, based on changes in the price of corporate securities is unallowable. | ||
**(2) Any compensation represented by dividend payments or which is calculated based on dividend payments is unallowable. | **(2) Any compensation represented by dividend payments or which is calculated based on dividend payments is unallowable. | ||
**(3) If a contractor pays an employee in lieu of the employee receiving or exercising a right, option, or benefit which would have been unallowable under this paragraph (i), such payments are also unallowable. | **(3) If a contractor pays an employee in lieu of the employee receiving or exercising a right, option, or benefit which would have been unallowable under this paragraph (i), such payments are also unallowable. | ||
+ | |||
+ | ==Summary== | ||
+ | Stock options and similar securities are unallowable if the compensation is based on the changes in the price of the security. Because this form of compensation is unallowable, and the US Government will not reimburse a contractor for these costs, most US Government contractors do not use these instruments to compensate their employees. In rare cases, in which the exercise price is less than the market price, a portion of stock options may be allowable, under APB 25. It is rare, because is such cases, this situation creates tax consequences for the receipiants of the stock options. Also see [[CAS 415 - Accounting for the Costs of Deferred Compensation]] | ||
+ | |||
+ | ==References and Notes== | ||
+ | |||
+ | <References/> | ||
+ | |||
+ | ==Resources and Links== | ||
+ | ===Internal=== | ||
+ | *[[See APB 25 - Accounting for Stock Issued to Employees]] | ||
+ | *[[CAS 415 - Accounting for the Costs of Deferred Compensation]] | ||
+ | |||
+ | ===External=== | ||
+ | List of APB Opinions - Wikipedia has very good table listing each opinions with full text. The web page is: http://en.wikipedia.org/wiki/List_of_APB_Opinions | ||
+ | |||
+ | ==Contributors== | ||
+ | Name, Title, and Organization | ||
+ | ====Major==== | ||
+ | ====Minor==== |
Latest revision as of 08:13, 28 March 2015
Allowable or Unallowable:
Source: "CAS" is not in the list of possible values (Other, FAR, DFAR) for this property., FAR
Contents |
Stock Options, Stock Appreciation Rights and Phantom Stock Plans
Allowable or Unallowable?
Unallowable
However, in Rare instances, Allowable under Accounting Principles Board (APB) 25 rules. See APB 25 - Accounting for Stock Issued to Employees
FAR 31.205-6(i) Citation[1]
- (i) Compensation based on changes in the prices of corporate securities or corporate security ownership, such as stock options, stock appreciation rights, phantom stock plans, and junior stock conversions.
- (1) Any compensation which is calculated, or valued, based on changes in the price of corporate securities is unallowable.
- (2) Any compensation represented by dividend payments or which is calculated based on dividend payments is unallowable.
- (3) If a contractor pays an employee in lieu of the employee receiving or exercising a right, option, or benefit which would have been unallowable under this paragraph (i), such payments are also unallowable.
Summary
Stock options and similar securities are unallowable if the compensation is based on the changes in the price of the security. Because this form of compensation is unallowable, and the US Government will not reimburse a contractor for these costs, most US Government contractors do not use these instruments to compensate their employees. In rare cases, in which the exercise price is less than the market price, a portion of stock options may be allowable, under APB 25. It is rare, because is such cases, this situation creates tax consequences for the receipiants of the stock options. Also see CAS 415 - Accounting for the Costs of Deferred Compensation
References and Notes
Resources and Links
Internal
- See APB 25 - Accounting for Stock Issued to Employees
- CAS 415 - Accounting for the Costs of Deferred Compensation
External
List of APB Opinions - Wikipedia has very good table listing each opinions with full text. The web page is: http://en.wikipedia.org/wiki/List_of_APB_Opinions
Contributors
Name, Title, and Organization