The Accounting Standards Board (ASB) has published revised exposure drafts on the future of financial reporting in the UK (a copy can be found here). This follows consultation on earlier drafts in October 2010 and March 2011.

In a change to their previous position, the ASB is now proposing that Small and Medium-sized Entities should not have to use option pricing models when calculating share based payments charges, as the cost of the calculations is disproportionate compared to the benefit to users of financial statements. The ASB report states (at paragraph 5.20) that:

"The ASB gave consideration to whether an entity should be required to recognise the costs of sharebased payments; it decided that there is an economic cost to the entity of providing share-based payments which should be recognised. The ASB, however, noted that for many unquoted entities measuring this economic cost using option pricing models may incur disproportionate costs in comparison to the benefit to users of financial statements. It therefore decided to clarify that option pricing models are not required in all circumstances and that an entity could measure share-based payments using models that were appropriate to the entity's circumstances."

Comments on the revised drafts can be made until 30 April 2012.

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