The Financial Reporting Blog

A weekly update on financial reporting topics curated by Mercer Capital’s Financial Reporting Valuation professionals.

Equity-Based Compensation: Are Non-GAAP Earnings Misleading?

During the 1990s debate over the status of stock options as a corporate expense, the big technology companies argued passionately that, since stock option grants to employees don’t ding the corporate checkbook, they should not be recognized as an expense. Despite winning the initial battle (SFAS 123), the tech companies ultimately lost the war (SFAS 123R). Regardless of the ongoing debate about how best to measure earnings, stock-based compensation is a tool used by companies of all sizes and in all industries. In order to deliver the most reliable information to investors, companies need to carefully evaluate the value of such compensation packages when granted.

Free to a Good Home: Assigning Balance Sheet Items to Reorganized Reporting Units

One of the challenges faced by companies in the goodwill impairment testing process involves estimating the carrying value of a reporting unit when the corporate structure of the business has been reorganized. At Mercer Capital, we have assisted companies with this potential problem on numerous occasions.

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