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Pastimes : Austrian Economics, a lens on everyday reality

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To: Don Lloyd who wrote (21)12/6/2001 1:36:27 AM
From: LLCF  Read Replies (1) of 445
 
Don, it seems to me that in your example, Warren would pay current shareholders a lower price per share [by 2 million / number shrs out] in either example. It matters not whether the company has actually paid out cash, or paid out stock.

Warren is correct that options must be accounted for at the value they had when granted. The ledger however is kept open and adjusted each year depending on their value. They are somewhat like a contingent liability... the exact account name used is not important although it should be at least noted in the salary expense portion IMO.

DAK
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