bmw
I'll try to be kinder and explain it to you.
I assume that you are just ignorant little boy :-))
I was talking not about derivative accounting but
about new goodwill rules, little beamer
Regards
-Misleading Snake
U.S. Earnings Reports May Not Shed Light on Profits (Update1)
2001-08-03 09:48 (New York)
U.S. Earnings Reports May Not Shed Light on Profits (Update1)
FASB's Role
..........................
Hill complained that the Financial Accounting Standards
Board, the private group the Securities and Exchange Commission
relies on to set accounting standards, ``helped sprinkle these
things with holy water'' by easing the earnings impact of
accounting for goodwill from acquisitions.
Goodwill is the amount a purchaser pays beyond book value for
a company's assets -- substantial sums in the case of technology
companies with soaring stocks.
New FASB rules, passed last month, allow companies to assess
the value of goodwill on their books periodically and take charges
only when that value has fallen. The group backed away from a
proposal that would have forced companies to continue to amortize,
or write off, the value over 20 years or more.
Lynn Turner, the SEC's chief accountant, has put the issue on
the agency's radar screen. More than once, he has referred to the
pro-forma trend as ``everything but bad stuff'' earnings reports.
Turner said in June that the SEC is investigating whether
four companies misled investors with pro-forma earnings
statements. He has prodded Financial Executives International, a
trade group, to release guidelines calling on companies to ensure
that any pro-forma earnings cited in press releases are clearly
reconciled with generally accepted accounting principles.
``It just seems like people are not always shooting straight
with their investors,'' Turner said.
Congress is getting involved in the push for change as well.
``If every company comes up with its own definitions, the utility
of pro-forma reporting is diminished for a small investor as he or
she has no frame of reference to compare the pro-forma results
with,'' Representative Cliff Stearns, a Florida Republican, said
at a subcommittee hearing this week.
Preparing for Hurricanes
The GAAP basis is strict about what constitutes an
``extraordinary item,'' requiring it to be both unusual and
infrequent, said Julia Grant, associate professor of accountancy
at Case Western Reserve University. A company based in Florida,
for example, couldn't claim the costs of hurricane damage as an
extraordinary item because hurricanes are frequent in the state.
In theory, that rules out ``some things we see a lot,'' Grant
said, such as inventory writedowns, gains or losses from property
sales and charges for corporate reorganizations. Unlike SEC
filings, statements to the public and press don't have to meet
GAAP standards.
Intel Corp. last year pressed analysts to include investment
gains in earnings estimates. Analysts who follow Microsoft Corp.
did the same -- until the gains turned into a $2.6 billion
investment loss for its fiscal fourth quarter, when they were
excluded. |
