Nearly a decade after the release of FAS R now ASC , the concept of forfeiture rates is widely known and understood in the industry. In practice, though, finding the right forfeiture rate to apply is a real challenge.

Online Tutorial #6: How Do You Calculate The Cost of Employee Stock Options?

Bad estimates of the forfeiture rate lead to large true-ups no matter what expense model you use, causing unexpected income statement volatility. Avoid constant true-ups and minimize your budget-to-actual variances with forfeiture rates that are historically sound and representationally faithful.

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Expensing Stock Options

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