Final answer:
The re-measurement of the fair value of a stock option in financial statements depends on accounting standards, such as US GAAP, where employee stock options' fair value is measured at the grant date and not re-measured subsequently unless modified.
Step-by-step explanation:
Whether the fair value of a stock option is re-measured in the financial statements depends on the accounting standards being followed. Under US GAAP (Generally Accepted Accounting Principles), for instance, the fair value of employee stock options is typically measured at the grant date and is not re-measured in subsequent periods, unless certain modifications occur.
Conversely, for other types of derivatives accounted for under ASC 815 (Derivatives and Hedging), fair value changes are recognized in earnings in each period. It's important to differentiate between employee stock options and other derivative financial instruments, as the accounting treatment for each can substantially differ.
In summary, for changes in the fair value of stock options, the treatment would depend on the specific nature of the option and the relevant accounting guidelines.