If you write off something as 100% worthless why should you be allowed to sell it.
Do you think the IRS would allow me to write off something at 100% then sell it for full value.
I believe it is not only unethical but criminal.
Bar the better opinion of a tax accountant/attorney, (I am neither one nor the other), I believe that if you sell something you wrote off, applying a tax basis of ZERO, I do not see fault.
For example... I buy a car and use it for business, over the years I depreciate it (using whatever schedule is allowed), and at a given point the book value is fully depreciated and its tax basis is now zero... Then later, if I can sell it and the basis I apply is zero (i.e. 100 % taxable gain), then that is perfectly legal. I do believe that would apply to obsolete inventory that was written off at one point.
The key, in the case of the inventory would be to justify the "obsolete" status.
I believe it is not only unethical but criminal.
based on..... ? (statue, precedent, or opinion) ?
am not an accountant or a lawer but how the street can let CSCO get away with this is insane. They PURPUSELY lied to make future quarters look better. Had they not written this off their margins would not be as good nor would sales data.
The clear intent was to DECEIVE.
I am not an accountant either nor a shark. -g (ooops) I am having a hard time finding a justification to your statement, perhaps I am not understaning it.
I am not sure that they would go take the write off with the specific intent of saying that the subsequent quarter would be "better"
Perhaps....
The mistake is by the analysts for having created an environment of the "quarter to quarter" ideal ... I mean...If we define the term long term investment, we need to take the view of a longer term horizon, (i.e. longer than 3 months). Now if we are speculating then the quarter to quarter seems appropriate.
In which way did Cisco lied ? did they write off the inventory ? A = yes. How did they justified the "obsolete" status ? seems like the more important question. How did they do it ? A= I personally do not know.
Sorry Mish. I just don't see how they lied, since they disclosed the inventory being written off. In the end... the cash (from the sales) remained with Cisco...
The only thing perhaps is that raises a question as to what criteria did they use to determine the inventory obsolete. Particularly when later they were able to seel it afterward.
Perhaps CSCO should have been more detailed as to how they arrived at such decisions... but criminal, I do not see how...
disclosure... I hold no shares of CISCO (neither long or short) |
