Question

QUESTION #1 – What is the controversy surrounding use of the intrinsic value method?

QUESTION #2 – Describe what is the treasury stock method. When is it used?

QUESTION #3 – IN YOUR OWN WORDS, what does earnings per share mean? IN YOUR OWN WORDS.

QUESTION #4 – How can the issuance of stock options affect EPS?

QUESTION #5 – How do we measure compensation expense for stock options?

Answer 1

Answer:-

1.) Controversy in Intrinsic Value:-

The idea that species and ecosystems have intrinsic value inspires many conservationists, perhaps drawing on deep-seated emotional connections to the nonhuman environment. However, although intrinsic value may get conservationists out of bed in the morning and into the field or up to the bargaining table, it does not serve them well once they get there.

Conservation requires decisionmaking, and here intrinsic value falls short. Decisionmaking requires tradeoffs: competition among conservation projects for limited funds and personnel, compromises between preservation of biota and other human uses, and even conflicts between conservation goals (e.g., predation by endangered peregrine falcons threatening recovery of also endangered California least terns). Trade-offs require comparative evaluation of competing claims, whether this evaluation is done explicitly (e.g., by eliciting preferences, as in multicriteria decision analysis, or by monetizing value, as in contingent valuation [[Chee 2004]]) or implicitly, by taking a particular decision (e.g., approving a development proposal for a land parcel that harbors a threatened ecosystem, such as longleaf-pine savannah).

Proponents of intrinsic value as a basis for conservation action hope that it will take precedence over competing claims and guarantee conservation. This rarely happens, even for decisions relatively insulated from the pressures of competing demands. For example, any species that is threatened or endangered is eligible for protection under the US Endangered Species Act (ESA). In principle, intrinsic value should give any kind of species equal access to ESA listing. In practice, however, limited funds and personnel to administer the ESA, and political and legal pressures to list particular species (or not), have forced agencies responsible for listing decisions to assign priorities to species on the basis of “scientific” characteristics, such as taxonomic distinctiveness and geographic distribution, and “visceral” characteristics, such as large size and charismatic appeal (Metrick and Weitzman 1996). Intrinsic value may get a proposed listing to the table, but it does not muster the attention needed to get it off the table and into action.

When protection of species and ecosystems conflicts with economic development or with immediate human needs, intrinsic value is even less likely to be an effective basis for conservation. Although proponents of intrinsic value hope that it will take priority over competing socioeconomic demands, it is more likely that conservation goals will be cast aside in favor of those more easily computed in familiar metrics such as dollars. This is not unique to conservation decisionmaking. Many assert that human life has intrinsic value and object to evaluating the preservation or extension of a life in relation to profit, convenience, or other desired ends. Yet decisions about health and safety regulations, such as setting highway speed limits or permissable levels of pesticide residues in food, require at least implicit calculation of what human life is “worth.” Sometimes that calculation is made explicitly, and extension of life or prevention of illness is expressed in quantitative, perhaps monetary, terms.

2.) Trasury stock bond:-

Treasury stock is a contra account recorded in the shareholder's equity section of the balance sheet. Because it represents the number of shares repurchased from the open market, it reduces shareholder's equity by the amount paid for the stock. In addition to not issuing dividends and not being included in EPS calculations, treasury shares have no voting rights. Also, the amount of treasury stock cannot exceed the maximum proportion of total capitalization specified by a nation's regulatory body. In the United States, the Securities and Exchange Commission (SEC) laws govern buybacks.

Used:- When we need to secure our return and want fixed return on our investment without any risk on it.

3.) Earning Per Share:-

It means that when shareholders want to get fixed return on their investment and evaluate the profir earning capacity of company, before investing in any company they track the EPS record of such company and judge what is earning rate on per share so they can invest as their requirement.

4.) Affect on EPS:-

When any company issue stock option, it give somewhat option to employee or shareholders to purchase it less than fair value due to give option to purchase less than cost so its affect the earning because company issue shares but doesn't get cash on such shares. that EPS we called Diluted Earning Per Share and Free shares we issued we called it Potential Equity.