iBio (IBIO) has accrued a liability of roughly $4.2 million within the last six months of 2010, which represents over half of the company?s total liabilities and equity. This is only part of the required accounting for options that affects both the financial statements and shareholders through greatly reduced net income and the dilution of stock upon settlement in equity.
Expensing options and warrants (options with a long time period) has been a controversial topic over the past 20 years, involving the FASB, SEC, and Congress at times. Current U.S. GAAP now requires that options be revalued at each reporting date, and any loss be expensed until final settlement [1]. The basic accounting that iBio is using for options, which it plans on settling with its own stock, starts with an increase in compensation expense and an increase in a compensation liability proportional to the gain or loss on the
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