FAS 150

[Guest mcook]

Has anyone reached an opinion on whether or not FAS Statement 150 applies to ESOPs? The statement itself appears to offer conflicting messages.

[RLL]

Hi mcook ---

See the following update article (dated 6/11/03) on the NCEO web site: http://www.nceo.org/columns/cr143.html

[Guest mcook]

RLL, thank you. My research originally started with the NCEO article but I found it of little help. I plowed through FSA 150 but could not reach a conclusion either way.

[BeckyMiller]

The problem of whether or not ESOPs are subject to SFAS 150 is due to the language used in paragraph 17 of the pronouncement. This reads:

This Statement does not apply to obligations under stock-based compensation arrangements

if those obligations are accounted for under....AICPA Statement of Position 93-6,

Employers' Accounting for Employee Stock Ownership Plans, or related guidance. However,

this Statement does not apply to a freestanding financial instrument that was issued under a

stock-based compensation arrangement but is no longer subject to.... SOP 93-6, or

related guidance.

So - the first sentence refers to accounted for under the standard, the second refers to subject to. All ESOP shares are subject to SOP 93-6 if you have GAAP statements. At this time, the FASB staff has given informal opinion, that this means that all ESOP shares are not subject to GAAP until such time as the shares leave the trust. (Once distributed, the shares are no longer subject to SOP 93-6). They are considering issuing additional FASB staff guidance on this matter.