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This is not my understanding at all. Share compensation is considered an expense because it reduces the value of the shares held by other shareholders. It's a
by jacques_chester 4y ago
This is not my understanding at all. Share compensation is considered an expense because it reduces the value of the shares held by other shareholders.
It's advantageous for cashflow but neutral vs cash on the income statement.
Disclaimer: I am not an accountant, this is not financial or accounting advice.
Disclosure: I work for Shopify, but this should not be taken as a statement about Shopify's accounting or financial practice.
- deleted 4y ago[deleted]
- kazinator 4y agoIt seems like it would be along these lines. - The company may have to issue new stock for this. That's like a loan: some entity gives cash, in exchange for a piece of the pie. Not in the expense side of the ledger. This is where the value of the shares gets diluted, but I don't think that fluctuations in the value of stock go into the ledger Publicly traded stock fluctuates all the time; that can't be going into the books! - If the entity is some body of the company itself which is buying the stock, in order to give it to employees, than that plausibly looks like an expense. Buying stock (in anything) would normally be recorded as an asset, I would think, but if the intent is to give it away, then it looks like an expense. Analogy: a laptop bought for company use would be an asset, but if it's intended to be ginve away as a door prize in a raffle, then it's an expense.
- kgwgk 4y agoWhat "would be" along those lines? GAAP are what they are.