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- Dec 7, 2020
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I am working on a new client who has their shareholders purchase 1 share of stock for $10,000. They then have an appreciation schedule on that 1 share every three years they are a shareholder. For example, they buy in 1/1/2019 for $10,000 then in 1/1/2022 the share increases to $13,000. When a shareholder is bought out, they are recording this as treasury stock. I don't believe this is correct. I think they should be recording this as a stock right appreciation. They should be recording the appreciate during they year it appreciates as a liability and the other portion to compensation expense.
1) Can someone confirm that I am correct in this area of thinking. I was reading the FASB 28, is there any other research I should be looking at?
2) How would you go about fixing this when they have been recording this incorrectly for years?
1) Can someone confirm that I am correct in this area of thinking. I was reading the FASB 28, is there any other research I should be looking at?
2) How would you go about fixing this when they have been recording this incorrectly for years?