EBay Stock Option Plans Essay Example | Topics and Well Written Essays - 750 words

EBay Stock Option Plans - Essay ExampleWhen the figures are compared amongst the two methods, the figure that denotes eBays un bankable operations do-nothing be turned to a profitable one with the choice of the accounting method. Thus, ethical considerations which should be based on accurate reporting of its execution to its investors, are of little importance to eBay in choosing the method for reporting its options.Certain financial considerations seem to playfulness part in the choice of eBays financial reporting for stock options. As the choice leave alone impact a handful of items in the financial statements of the smart set, financial considerations seem to be very applicable as for eBays choice of intrinsic honour over fair market esteem (Bradshaw 2004, 3). harmonise to an article from Darden Business Publishing, University of Virginia, the main advantage of choosing intrinsic value over fair market value is that firms will not record compensation expense when the mark et damage is equal to the exercise price (2004, 12). This gives a firm a significant financial advantage as it reduces the effect of compensation expenses to the companys operating expenses, which then affects the companys net income.When a company like eBay can choose to report its stock options based on the intrinsic value method, it is required to put footnotes in order to show the figures if fair market value method is used for financial reporting. However, because this is just a footnote and does not require recognition in the financial statements of the company, the choice has some strong relevancy to the financial considerations that are associated with it.According to the article from the University of Virginia, the shift from intrinsic value to fair market value method of reporting stock options will impact eBays financial statements by recognizing a deferred taxation asset for the estimated future benefit, which will