[Marc Poor]

Terrific synopsis! Should corporations be required to expense options as they are issued? There must be a way to compute the expected current value of these options, and then carry that as a liability on the balance sheet.

[ken5050]

The value of the option can be estimated, then it should be deducted in the current year as an expense..which reduced earnings....Look, companies estimate the useful life of building and airplanes when they take depreciation, so figuring the value of an option isn't that hard....

[Marc Poor]

We are probably on the same page with this. If the expected value of the liability for a given company was, say $3 million last quarter, and is $3.5 million this quarter, then a expense of $.5 million would be charged this quarter. (right?). If the stock price dropped, and the options became worthless, then there would be a credit to earnings for the quarter. At least, that how it seems to me.