The definition of an employee is broader under IFRS than it is under ASPE. ASPE includes an option to use the calculated value method for determining expected volatility, while IFRS does not include such an option. IFRS provides more specific guidance on accounting for modifications and settlements than ASPE does. Stock option expensing is a method of accounting for the value of share options, distributed as incentives to employees, within the profit and loss reporting of a listed business. On the income statement, balance sheet, and cash flow statement say that the loss from the exercise is accounted for by noting the difference between the market price (if one exists) of the shares and the cash Basics of accounting for stock options. 3. Compensatory stock option plans In other words, U.S. GAAP considers the options “earned” by the employee during the vesting period. The entry credit is to a special additional paid-in capital account. Let’s take a look at an example.