Stock Option Accounting

Term Paper # 105164

Accounting > Financial
Business > Accounting
Ethics

This paper explores the accounting concepts surrounding eBay's stock options.

966 words () | 3 sources | APA | 2008 United States

Paper Summary:

The paper examines the ethical issues surrounding eBay's financial reporting practices and how eBay's practices are affected by the current accounting procedure for stock options. The paper also explores what a conversion to the fair value method implies for eBay and its stakeholders. The paper then provides two specific examples related to the effects on financial statements and examines footnote disclosure from an ethical perspective. The paper concludes that eBay should change the accounting for stock options, even though it is not mandated.

From the Paper:

"It is argued that the triangulation of the accounting concepts surrounding stock options for eBay employees does not absolve the ethical consideration and obligation to include the earnings of the company that is affected by actions that have an intrinsic value to the firm (Baviera & Walther, 2005, p. 2). Even the FASB is currently trying to get companies like eBay to expense stock options in wake of the fact that it adds a significant value to executive compensation and the fact that employees can sell these shares for cash implies that they should be expensed rather than treated as a footnote (Baviera & Walther, 2005, p. 3).Overall eBay's stock options are not 'value-less' and should impact expenses, the issue is what value should be used? "

Sample of Sources Used:

Baviera, G. & Walther, L. (May 2005). Stock option accounting: Defying the usual answers. The CPA Journal. Retrieved August 5, 2007, from http://www.nysscpa.org/cpajournal/2004/504/essentials/p36.htm
Salkever, A. (2003, April 30). eBay's scary stock-option specter. Business Week. Retrieved August 5, 2007, from http://www.businessweek.com/technology/content/apr2003/tc20030430_3074_tc055.htm
Thorne, C. (2006). Fair value: The valuers' perspective. International Valuation Standards Committee. Retrieved August 5, 2007, from http://www.frc.org.uk/documents/pagemanager/asb/Roundtable-Booton.ppt