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To: jonkai who wrote (71938)	7/31/2002 5:54:59 PM
From: Exacctnt	Read Replies (1) \| Respond to of 74651

<<<<it requires the recognition of the cost of stock options.... and gives the green light for a different way of expensing and reporting employee stock options...., it references "the fair value method" specifically as a replacement for it's old method.... >>>> I maintain that the Treasury Stock method is the method which determines the quantity of diluted shares in the fully diluted earnings per share calculation. A company can expense options or not. It will not affect the calculation of shares. The calculation of diluted shares is what the Treasury Stock method is used for. It isn't an old or new way concept on how to account or not account for option expense. We are not on the same page and you know it. You are very devious when asked direct questions to explain your claims or to provide proof of your assertions.

To: jonkai who wrote (71938)	7/31/2002 6:26:51 PM
From: Exacctnt	Read Replies (2) \| Respond to of 74651

To the thread, Look what fell into my lap at the right time. fwcook.com The Financial Accounting Standards Board’s method for determining the additional dilution from stock options for purposes of calculating earnings per share is the treasury stock method. This method adds to common shares outstanding the number of shares (“share equivalents”) that would result if all in-the-money stock options were exercised and the exercise proceeds received by the company were used to repurchase shares on the open market. Another way to look at it is that the additional share equivalents derived using this method are equal to the number of shares that can be purchased at current market with the after-tax gain on outstanding stock options. This calculation is performed every period that options are outstanding, whether or not vested. Checkmate!! Link courtesy of the Employee Stock Options - NQSOs & ISOs Thread.

To: jonkai who wrote (71938)	8/1/2002 7:23:44 AM
From: rkral	Read Replies (1) \| Respond to of 74651

jonkai, the "fair value method" optionally replaces the "intrinsic value method" in GAAP accounting per FASB FAS 123. The FASB circa 1994 intended to make this replacement mandatory. It would probably have succeeded, if lobbyists had not succeeded in getting Congress to intervene. Consequently, most companies have continued to use the intrinsic value method. Why? They love the resulting $0 option grant cost. As to the crux of your discussion with Exacctnt: 1) the "fair value method" evaluates the option grant cost, 2) the "treasury stock method" evaluates the dilution shares used to calculate "diluted EPS". Both are used .. and required. One does not replace the other. They are apples and schmapples. Just my 2 cents. Ron