You’ve just completed the ESOP transaction. Now, how do you record it, and what impact will it have on your financial reporting to banks and other stakeholders? This interactive session is designed to guide participants through the initial and ongoing accounting for a real-life ESOP transaction under Generally Accepted Accounting Principles (GAAP). We will delve into the accounting for elements such as shares released, warrants, and stock appreciation rights (SARs). Additionally, we will discuss how users of financial statements, including lenders, review and analyze these statements post-ESOP to assess and calculate financial covenants. NCEO Publication: Accounting for Leveraged ESOP Transactions NCEO Group: ESOP Finance Working Group
Learning Objectives:
Understand the accounting entries for ESOP transactions: Learn how to record and report the initial purchase of ESOP shares, as well as the recurring accounting entries associated with these transactions.
Differentiate between types of internal ESOP loans: Identify various internal loan structures used in ESOPs and comprehend their accounting treatments, including their effects on financial statement footnotes.
Assess the impact of ESOP accounting on financial covenants: Evaluate how ESOP accounting entries influence financial statement covenants and the implications for financial reporting to stakeholders.
