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I can't resist jumping in again......you still haven't replied to my earlier queries as to why it's OK for companies to GUESS at depreciation schedules, GUESS at residual values, GUESS at loan loss reserves, GUESS at renewal rates, yada yada, yada...GUESS has a negative connotation.....ESTIMATE is far better..or are you advocating that companies shouldn't do these things...

BTW...if I accept all your points about the problems with estimating the value of options grants, what's wrong with correcting the valuation each year....there are lots of ways it could be done...hire three investment firms who have NO investment banking relationship with the company, and take the average of the three..Also, to avoid the number being skewed up or down, because of a sudden swing in the stock price, do it on the first day of each month of the last quarter of the company's FY, and average those....wouldn't be perfect, but would be far better than what we have now....

On a related topic.....what do you think should happen when and if a company decides to reprice its options grants? ( Hint: I've tried to gently hoist you on your own petard.)

Regards...

"you still haven't replied to my earlier queries as to why it's OK for companies to GUESS at depreciation schedules, GUESS at residual values, GUESS at loan loss reserves, GUESS at renewal rates, yada yada, yada...

BTW...if I accept all your points about the problems with estimating the value of options grants, what's wrong with correcting the valuation each year

You are missing the point. Why add in a new level of GUESSWORK to our current accounting mess? What does that improve? Our current system doesn't have to make guesses as to the final value of options, and it does this because it waits until options are exercised.

When options are currently exercised, the corporation is charged the precise expense, and that expense is then written into the accounting books. Thus, a single revision is made to accurately reflect expenses.

Why change that process? Why force companies to make more guesses into their acconting books? Why make accounting more complicated and more subject to guesswork, revisions, and opportunities for fraud and embezzelment?

You can rest assured that the crooks are cheering you on. The crooks WANT American companies to change their accounting procedures to expense options with guesswork when those options are issued, instead of the current system that enteres the precise expense for options when/if they are exercised.

Senator McCain, who had a hand in cheating honest citizens out of millions of Dollars via his S&L scandal (which included "cooked books") in the 1980's, is currently the biggest cheerleader for changing over to a system that "expenses options" with guesswork.

I wonder why...