Abstract
This article deals with the accounting aspects of ESOPs. Though the primary authoritative guidance on accounting for ESOPs is still SOP76-3, “Accounting Practices for Certain Employee Stock Ownership Plans,” ESOPs have mushroomed in complexity since its issuance. Accordingly, many issues have arisen in practice that were not addressed by this SOP. Some of these areas have been addressed by the FASB's Emerging Issues Task Force; the AICPA also is in the process of re-examining its position. Specific controversial accounting areas explored in this article include the sponsoring company's ESOP debt recognition, expense recognition, treatment of dividends, and EPS considerations. A particular point of controversy appears to be whether companies should use historical cost or current value in calculating compensation expense.
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