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To: Skeeter Bug who wrote (16400)	8/5/2002 3:08:22 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 42834

SB, You didn't pay any attention to my discussion of the (non)significance of writing yourself an IOU. Stock that a company owns itself is in a peculiar state of existence and is equally meaningless until it is given away or sold. If a company prints up stock certificates for 10% of the previously existing shares of the company, the certificates are merely owned by the shareholders along with everything else the company possesses. The shareholders still own 100% of the company. If the certificates are distributed to the shareholders as a stock dividend, or a partial stock split, all of the shareholders will nominally hold 10% more shares, but still will own collectively 100% of the company, which now has a lower split-adjusted per share stock price, but nothing of economic significance has happened for anyone. Nothing the shareholders do with their shares falls within the purview of company accounting. If they give some of their shares to their brothers-in-law, no one cares. If the brothers-in-law happen to be company employees, there is still no accounting involvement. Every possible distribution of shares to employees as compensation can be exactly duplicated by an appropriate transfer of split shares directly from shareholders to employees. If accounting attempts to come up with substantively different treatments of events that start and end in identical states, then it is guilty of the error of arbitrariness. Regards, Don

To: Skeeter Bug who wrote (16400)	8/5/2002 3:32:40 PM
From: Math Junkie	Read Replies (1) \| Respond to of 42834

"let me throw this out, in the mean time. if a company pays the electric company with stock, should that expense run down the income statement? what if a company trades stock for a building? is that an expense that runs down the income statement?" I was thinking that the proceeds from selling options would count as income, and the proceeds from selling stock would not, but I could be wrong about that. Whichever way you count it, I think that you need to do it the same way regardless of whether the money is going in or out. If giving the employee back his or her purchase price for options counts as an expense, then collecting the purchase price for the options should count as revenue.