Two students are discussing the current chapter on dilutive securities and earnings per share. Here are some of the points raised in their discussion.
1. Is there a difference between issuing convertible debt versus issuing debt with share warrants? Also, does it make a difference whether the share warrants are detachable or non-detachable?
2. Why is it that companies are not permitted to adjust compensation expense for share options when the options become worthless because the share price does not increase in value?
3. What is the rationale for using the treasury-share method in earnings per share computations?
4. Why do companies have to report compensation expense for employees share-purchase plans?
After the employee receives the shares, the price can go up or down, so what is the benefit that the employee is receiving?

Instructions
Prepare a response to each of the questions asked by the students.