Question

What is the difference between granting stock options and granting restricted stock units? What is the difference in the financial reporting of the two?

Answer 1

STOCK OPTIONS:

They are the rights to buy options at some future date as of present rates established now.by this way the high growth

rated firms can exceed their current values at high volume amounts, so these are more wothable options, by exercising

options one can become official share holder

RESTRICTED OPTIONS:

Generally it is the stock with restrictions for which payment is not usually required.

The holder cannot sell until they vest moreover the company retains the right to repurchase the all the unvested at the time

of employee termination. but upto then thay are officially share holders

Generally accounting is similar to both restricted stock units and stock options. the main difference is only valuation, certain complex pricing option method is necessary.

but if warrants are not vested when granted on gran date No general entry is made

compensation expense is debited

common stock credited

It is to be noted expected forfeiture is reduced every year based on vesting.

Basically there is no difference between these granting stock options and granting restricted units on Grant date.

Restricted units stock units do not have any strike price.Generally they are issued based on the market price of companies on

the previous day, but there is no such type of settlement for stock incentives.

These two are technical tools used by the employers to motivate and reward their employees.