**I like the Monet example. Suppose instead of giving the Monet to the CEO, they sold it for $5,000,000 and gave him or her the money. They would then book $5,000,000 in revenue for the sale, and $5,000,000 in expense when they gave the money to the CEO. Do you agree that this would be a correct accounting treatment?**
would it be considered revenue or some kind of asset appreciation?
**Now, suppose that, unbeknownst to the company, the CEO (through an intermediary) was actually the buyer of the Monet. Wouldn't that be completely equivalent to their giving the Monet to the CEO in the first place? After all, the end result is exactly the same.**
sounds about right.
**The company ends up having neither the Monet nor the money <g>, and the CEO ends up with the Monet, so the end result is identical. Consistency would therefore demand that the accounting treatment be the same. The company should book $5,000,000 of expense AND $5,000,000 of revenue.**
i'll have to ponder this...
let me throw this out, in the mean time. if a company pays the electric company with stock, should that expense run down the income statement?
what if a company trades stock for a building? is that an expense that runs down the income statement? |
