Holding Loss/Gain as an Alternative to EPS Dilution

Current value accounting is an alternative to the earnings-per-share (EPS) dilution reporting of Accounting Principles Board (APB) Opinion 15. Information produced by current value accounting for corporate-issued securities options is superior to the EPS dilution information produced by current generally accepted accounting principles (GAAP). The possibility of a current value alternative to the current EPS dilution reporting method depends on whether: 1. corporate-issued securities options are classifiable as nonresidual equity contracts, 2. appropriate current values are readily available for corporate-issued securities options, and 3. holding gain-loss information is superior to EPS dilution information. Positive responses to all 3 issues are possible. For example, gain-loss information is more useful because, contrary to EPS dilution, it contributes to the determination of comprehensive income and is more relevant to decision making in the context of a specific model.