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FASB Exposure Draft: "Share-Based Payment"

Tuesday, June 29, 2004

The Financial Reporting Committee of the Institute of Management Accountants is pleased to provide comments on the Exposure Draft (ED), Share-Based Payment. We generally agree with the Board’s tentative conclusions on the threshold issues that stock options should be charged to expense based on fair value estimated at the grant date using an option-pricing model. However, we do not support the ED as a whole because we strongly disagree with provisions in the ED related to accounting for income taxes, the guidance regarding determination of assumptions, the treatment of awards with graded vesting, as well as the proposed effective date and transition. In addition to those major objections, this letter describes our other suggestions for changes to improve the ED. If the Board modifies the ED as we suggest, we believe that the document would be greatly improved and we would therefore support its issuance as a final Statement. We are hopeful that this can be accomplished, as we believe it is time to bring the stock options debate to a final resolution.

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