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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 173.96+1.4%Nov 11 3:59 PM EST
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To: hueyone who wrote (125835)12/4/2002 8:42:58 PM
From: cfoe  Read Replies (4) of 152472
 
I have a question about this business of "expensing options" and then counting the dilution resulting from real or assumed exercise against the lowered EPS. First, I am a CPA by training, so I understand accounting and I freely admit that my past "accounting knowledge" may be getting in my way. Here is what I do not understand (and please no rants in response, just a short simple explanation):

1) What exactly is the expense that would be recorded? Is it the difference between the option price and the current market price or something else?

2) Where else in the accounting for revenues and expenses does one transaction - the exercise (actual or implied) of options - get counted twice against EPS (earnings/shares outstanding)? First as an expense lowering the dividend (earnings) and then again as a divisor (shares outstanding)?

Again, please no rants. Just a simple explanation for something this past accountant has had trouble grocking. Thanks.
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