[Southack]

By the way, Microsoft and every other American company already DOES expense their options.

Yes, you heard it here first. All American companies ALREADY expense their options.

But they "expense" them when the options are exercised so that the accountants know the PRECISE value of the option.

All of this talk about "expensing" options is really talk about counting options as expenses (read: tax deductions) prior to knowing what the final value of the option will be worth. Sure, we could GUESS that a stock option will be worth $5 when its owner exercises it one day, but how accurate is that guess going to be on average? Everytime that guess is wrong, we'll have to make ADDITIONAL, new revisions to our already over-complicated accounting books. Why would anyone want to add those extra layers of obfuscation into our existing accounting fiasco?

In other words, it's a lot of nonsense that would add a lot of guesswork onto our corporate books.

And what would it get us?

We'd still have had Enron/Worldcom/Global Crossing frauds regardless of when options were expensed, so why do we hear such a sudden outcry to expense options (prior to knowing what they'll finally be worth)?

Who gains from that?

[wtc911]

You are right about the expensing practices. They were but a small part of the sleight of hand that WC pulled to make the stock more attractive than it was.

One of the tricks pulled by another company was to count project cost over runs as revenue. If, for example, an international power plant construction job was bid and accepted at $100m but the actual cost to completion was $160m then the over run was $60m. This company would record the additional $60m as revenue. The problem was that in almost every case the amount actually collected was far less because the buyer would not agree to the full over run after accepting a bid at the original cost.

The company was Haliburton, while Cheney was at the wheel.

[TheCPA]

Expenses on the financial statements are not necessarily the same as tax deductions. Financial statements are governed by generally accepted accounting principles, which are primarily determined by the Financial Accounting Standards Board. Deductions on the tax return must be authorized by the Internal Revenue Code.

[RJayneJ]

Thanks for the heads up! };^D)

[Deuce]

Who gains from this big push to expense options, and why are they bringing it up now?

Everybody who is interested in having companies report their real earnings gains. Why now? Because politicians normally blinded by the wishes of campaign contributors are for a short window in time motivated (for crass political reasons) to act in the public interest.

All American companies ALREADY expense their options.

They expense them for taxes at the time granted (reasonable) and never as an expense vs. current earnings for financial purposes (I believe). You seem to believe they are expensed at time of exercise. I don't think you are right (does anyone, here, know for sure). In any event, expensing them at exercise (while better than not at all) does not reflect an expense at the time it is incurred. This misstates earnings. Anyway, the reason I think you are wrong is because Bill Parrish (who knows more than either of us) has been calling attention to this problem for many years and describes it as "the greatest pyramid scheme of all times." He states that Microsoft would have incurred losses for the last 5-7 years if it reported stock options as incurred. You ought to check out Bill Parrish's site>