Well, accounting is not supposed to tell how valuable a company is, just what its balance sheet is, right? That people then take the balance sheet and invent ways to mechanically arrive at a valuation based on that is not GAAP's or any other accounting rules' fault.

The trouble with any accounting rules is that it's hard to convert everything on the balance sheet into the same unit. If you don't convert it all, it's really hard to compare balance sheets. If you do convert it all, this conversion may be unfair to one balance sheet more than another. Or at least that's how I understand it...

One example is pricing stock option grants so that you can then add them up with other expenses. I'm sincerely not sure how I'd do that. Here's a critique of what GAAP mandates:

http://www.cypress.com/documentation/ceo-articles/dr-rodgers...