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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (716)	12/14/2004 9:15:18 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 786

Great minds think alike, and fools seldom differ. Credit where credit is due, of course. It's the neatest piece of academic sleight of hand that I've ever seen! According to our individually minded accountants (paid for, no doubt in stock), payment in stock isn't something for companies to account for. The same central argument provides that a break-even company which pays all of its expenses in stock should report a gross margin of 100% and profits equal to revenues. Hmmm... It doesn't matter to the authors whether the company purchases the shares on the open market, causes shareholders to voluntarily transfer their shares to employees or creates more shares from thin air. Nope... the authors would give equal income-statement accounting to all three of these "off income sheet" transactions. Hmmm... Of course it wouldn't matter if the "telling of the economic story" (A.K.A. Accounting) was merely an academic exercise and serves no practical purpose. Unfortunately for a select few purists out there, there's a REASON why we ask companies to generate income statements. Which reason is sabotaged to the degree that equity financing is used to subsidize the results of continuing operations.