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To: TimbaBear who wrote (346)	8/8/2002 12:18:38 PM
From: Uncle Frank	Read Replies (2) of 562

>> In your example, if the selling company bought the components for $15.00 to deliver at $10.00 and did not record the -$5.00 as a loss, the company would be up on charges of fraud. I made no reference to the cost of goods. Presume it to be .01. The company realized a 9.99 profit on the transaction, but could have made 14.99 if it had recieved the spot market price. Imho, it's a perfect parallel to awarding an employee an option at current market value. The cost to the company is .01 for the paperwork. It only seems to be an expense in hindsight, based on comparison to the current (spot market) price of the stock. Imho, trying to account for opportunity loss would lead to severe distortions in perceived financial performance of a company. I see dilution as an important but seperate issue. Imo, it is an "expense" for the stockholders, not the company. With that, I shall depart this playing field, and leave it to the CPAs. As you so wisely pointed out, my limited knowledge of accounting methodology invalidates any conclusions I might reach through logic.

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