Publication Date


Document Type


First Advisor

Simon, John

Degree Name

B.S. (Bachelor of Science)

Legacy Department

Department of Accountancy


Statement of Financial Accounting Standards (SFAS) No. 123 is a new standard issued that introduces a fair method of accounting for stock-based compensation. The fair value can be determined using a pricing model, such as the Black- Scholes Model. Entities have the option to adopt SFAS 123 or continue using the intrinsic value method, prescribed by APB No. 25. If entities choose to continue using APB No. 25, they must disclose the pro forma effects of net income and earnings per share as if the fair value method had been used. SFAS 123 is effective for fiscal years that begin after December 15, 1995. The paper first discusses the implications of SFAS 123 and APB NO. 25. A sample of thirty companies in the manufacturing and computer industries is then analyzed to determine the compliance with the new standard.


26 pages




Northern Illinois University

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In Copyright

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Media Type