News

Mercury News: “Accounting rule makers handed down long-awaited final guidelines Thursday that will force companies to deduct the value of billions of dollars of employee stock options from reported profits starting in mid-2005.”

Here's some old discussion of what this means.

The old Silicon Valley hands are unhappy with the general concept of expensing stock options, and one reason they often give for this is the difficulty of figuring out the value of stock options. But anybody in the investment industry, and indeed, anyone with a rudimentary understanding of financial accounting knows that accounting for the value of an illiquid asset is always a problem yet something you always have to do anyway, and just because the value of stock options changes over time or because it is not possible to fix exactly does not mean it shouldn't be accounted for consistently.

Oh, and by the way: My company, Fog Creek Software, has paid internships in software development for qualified college students. They're in New York City. Free housing, lunch, and more. And you get to work on real, shipping software with the smartest developers in the business.

About the Author: I’m your host, Joel Spolsky, a software developer in New York City. Since 2000, I've been writing about software development, management, business, and the Internet on this site. For my day job, I run Fog Creek Software, makers of FogBugz—the smart bug tracking software with the stupid name, and Fog Creek Copilot—the easiest way to provide remote tech support over the Internet, with nothing to install or configure.

Enter your email address to receive a (very occasional) email whenever I write a major new article. You can unsubscribe at any time, of course.