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To: r.edwards who wrote (79454)9/5/2000 4:44:35 PM
From: biostruggle  Respond to of 152472
 
Affects cash flow when options cashed in. You are right does not affect income statement. The reduction in liability results in a reduction in retained earnings without showing up as an expense on income statement. One of the big holes in FAS accounting.



To: r.edwards who wrote (79454)9/5/2000 6:53:41 PM
From: engineer  Respond to of 152472
 
It sure is. It goes directly against expenses, as employee compensation. So it goes as regular wages, which is an expense, which takes away from profit. At least that is how they taught us when I got my MBA.

They are taking the options excercised as income or wages paid. They are doing this sooner than the requirement and thus reducing the EPS.


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