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Here's what I understand: Assuming a Company uses the fair value method) as allowed in US GAAP, the Company will estimate the fair value of the stock option on grant date, and then recognize this expense over the requisite service period. However, what are the related debits and credits on the day of the grant (assuming the grant does not vest till 1 year from grant date and then each month for 36 months)?
Credit side: What confuses me is that if you recognize anything in equity i.e. crediting APIC for the grant of the option, then when the options are exercised, what would be the credit then? Wouldn't that increase your APIC again?
Debit side : Similarly - if the stock comp expense is to be recognized (usually amortized) over the vesting period, do you wait for 1 year to start to recognize the related expense?
Does this mean that there is no journal entry on grant date for the options?
Credit side: What confuses me is that if you recognize anything in equity i.e. crediting APIC for the grant of the option, then when the options are exercised, what would be the credit then? Wouldn't that increase your APIC again?
Debit side : Similarly - if the stock comp expense is to be recognized (usually amortized) over the vesting period, do you wait for 1 year to start to recognize the related expense?
Does this mean that there is no journal entry on grant date for the options?