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Politics : PRESIDENT GEORGE W. BUSH
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To: Bill who wrote (271981)7/9/2002 4:07:08 PM
From: G_Barr  Read Replies (1) of 769670
 
I'm not sure you're correct about that, at least relative to the arms-length transaction rules of the 1980s. LBOs by insiders were very common at the time and I believe a sale of that kind of asset is almost always accounted for as profit.

An accountant friend told me it is only accounted as a profit when the loan is paid off. This seems to me to be common sense as it would be a little ridiculous that a company should be able to sell off its assets to insiders for nothing but IOUs and claim profits they may never get. However, if there is some other security involved it might make sense to treat it otherwise but I have not seen information on that.
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