Peeling away financial reporting issues one layer at a time

Category for Financial Analysis

Of What Use is Deferred Tax Expense to Financial Analysts?

Interperiod tax allocation has been required since the 1950s, soon after Congress permitted tax deductions based on accelerated depreciation of long-lived assets.  History indicates that the accounting standard setters who pushed for [Read More...]

Deferred Taxes and Tax Reform: Is a Big (Fictional) Accounting Gain in the Future?

I read today that Congress is likely to consider corporate tax reforms that would reduce the statutory income tax rate from the current 35% to as little as 15%.  The lower income tax [Read More...]

FASB Proposed Modifications to Hedge Accounting: Good Thing, Bad Thing, or Just a Thing?*

If we don’t destroy ourselves first, we will someday discover intelligent life on another planet.  But when we do, the chances are about one in a billion that we’ll find hedge accounting standards more complex [Read More...]

On Reconciliations and Financial Analysis

I have three things to write about today, which for the sake of length and ease of future reference, I will publish as three separate posts.  This is the first one.  

The FASB has [Read More...]

The Earnings Management is Hidden in the Details

With inspiration and encouragement from the John Hughes IFRS Blog, this post is a partial recycling from 2010 of Merrily We Roll Along — Forward and Up.   I had observed way back [Read More...]

“The Bankers’ New Clothes” is NOT a Fable

There are two types of people in the world: those who like to divide people into two types, and those who don’t.

Too simple? OK, try this one: some people find taxonomies very helpful; and others, not [Read More...]

How GAAP and IFRS Succeed in Overstating Bank Capital without Really Trying

As I stated in my post on ASU 2015-03, the accounting for debt issue costs is relatively small potatoes. The point was to illustrate that the FASB’s so-called “simplification initiative” was driven [Read More...]

ASU 2015-03: The Latest Simplification to GAAP That’s Not

Relative to the big changes that are supposed to be coming from the FASB (leases, revenue recognition, loan impairment), ASU No. 2015-03 on debt issuance costs is very small potatoes.  But, if you are [Read More...]

Trying My Best to Save LOCOM for Inventory

In my previous post, I expressed my opposition to the FASB’s proposal for replacing the LOCOM rule for inventory with “lower of cost or net realizable value.”

I stated that the extant U.S. GAAP [Read More...]

The FASB Wants to Dumb Down Inventory Impairment

OK, let’s start with something positive.  The FASB recently issued proposals to simplify two accounting topics, and whaddya know, I am actually in favor of one of them.

The “extraordinary item” income statement category is [Read More...]