The accounting treatment of stock options is crazy

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A company's CFO says: ‘‘The accounting treatment of stock options is crazy. We granted 10,000,000 at-the-money stock options to our employees last year when the stock price was $30.

We estimated the value of each option on the grant date to be $5. At our year-end the stock price had fallen to $4, but we were still stuck with a $50 million charge to the P&L.'' Discuss.

Reference no: EM131237586

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