Transactions in Financial Assets and Liabilities 243
(the “grant” date), providing that an employee may
purchase a given number of shares of the employer’s
stock at a stated price (the “strike” price) either at a
stated time (the “vesting” date) or within a period of
time (the “exercise” period) immediately following
the vesting date.
9.78 At the grant date, a transaction in employee
stock options should be recorded as the corresponding
entry to wages and salaries in kind (2112). Th e value of
the employee stock options recorded as compensation
should be spread over the period between the grant
and vesting dates, if possible. Similarly, any increase
in the value of the employee stock options between
the grant and vesting date should be classifi ed as com-
pensation of employees. If this is not possible, for a
pragmatic solution see paragraph 9.80.
9.79 When the option is exercised, the transac-
tion in the employee stock option is recorded at a
value that refl ects the diff erence between the market
price of the equity and the price paid by the buyer for
the equity. Any change in the value between vesting
date and exercise date is not treated as compensation
of employees but as a holding gain or loss (see para-
graph 10.43).
9.80 In practice, it is most unlikely that estimates
of the costs of employee stock options to the employ-
ers are revised between the grant date and the exercise
date. For pragmatic reasons, therefore, the whole of the
increase between grant date and exercise date is treated
as a holding gain or loss (see paragraph 10.43). Cancel-
lation of employee stock options is recorded as other
changes in the volume of assets (see paragraph 10.57).
9.81 Employee stock options do not generally raise
separate issues to those for fi nancial derivatives, but
one special case occurs when an employee of a subsid-
iary is issued options for stock in the parent company.
Because the parent is not the employer, the subsidiary
records a transaction acquiring the option from the
parent before granting the stock option to the em-
ployee. See also paragraph 7.222 regarding stock op-
tions provided to suppliers of goods and services to
an enterprise.
Other Accounts Receivable/Payable (3208, 3218, 3228, 3308, 3318, 3328)
9.82 Other accounts receivable/payable consist of
trade credits and advances and miscellaneous other
items due to be paid or received. Transactions in
trade credits occur when credit is extended directly
to purchasers of goods and services. Advances are
recorded for amounts paid in advance of work being
performed, or for prepayments of goods and services
(see paragraph 7.225).9.83 Miscellaneous other accounts receivable/
payable occur with respect to accrued but unpaid
taxes, dividends, purchases and sales of securities,
rent, wages and salaries, social contributions, so-
cial benefi ts, and similar transactions. Prepayments
of taxes are also included in this category. Accrued
but unpaid interest should be added to the principal
of the underlying asset rather than included in this
category.
9.84 Th is category is used to bridge the timing dif-
ference between the occurrence of economic events
and the time the actual cash fl ows take place. It should
not be used to record statistical discrepancies.Classifi cation of Transactions in Financial Assets and Liabilities by Sector and Residence.
9.85 For a full understanding of fi nancial fl ows and
the role they play in government fi nance, it is oft en
important to know not just what types of liabilities a
general government unit uses to fi nance its activities
and what types of fi nancial assets it holds as invest-
ments. It is also important to know which sectors
are providing the fi nancing and what types of fi nan-
cial assets are held. In addition, it is oft en necessary
to analyze fi nancial fl ows between subsectors of the
general government sector or the public sector. Th ese
fl ows of funds may be analyzed in a from-whom-to-
whom framework.^21 Table 9.2 presents a classifi cation
of transactions in fi nancial assets and liabilities based
on the sector and residence of the two parties involved
in the transactions.9.86 An issuer of securities is usually not a party
involved in a secondary market transaction in that
security. However, when a transaction changes the
residence or sector of the creditor, an entry in other(^21) See the PSDS Guide, Chapter 7, and Handbook on Securities
Statistics, Part 2, for a detailed discussion of the from-whom-to-
whom approach.