More Not to Like about Deferred Taxes: The Foreign Earnings Loophole
A seasoned accountant and regular reader of my blog wrote that, until my last post, he had seen little discussion of the potential to manage the effective tax rate upwards. He has, however, seen numerous instances where companies have done just…
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 interperiod tax allocation (ARB 44 and APB 11)…
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 rate would be offset by the elimination…
Toward a More Appropriate Objective for the FASB (and IASB)
I hoped that my previous post would make a compelling argument for why a more focused objective for the FASB could lead to standards that would better serve the public interest. Some readers liked it; however, two former policy makers were…
Why the FASB Won’t Define “Financial Accounting”*
The FASB has been prolific by any measure. The codification of authoritative GAAP alone is almost 8,000 pages for goodness sake. Believe it or not, that’s about twice as wordy as the U.S. Tax Code. “Financial Accounting” versus “Financial Reporting”…
The Parable of the Good Big-Four-Congressman
U.S. Representative Scott Garrett (Republican, New Jersey) was first elected to Congress in 2002, months after the passage of the Sarbanes-Oxley Act. A couple of weeks ago, he introduced legislation that would amend S-OX to require that PCAOB* enforcement actions…
Is “Accounting” Really Accounting?
I wonder why so little is made of the fact that key technical terms in U.S. financial reporting are misleading perversions of plain English? As a sampling, consider these, which I have written about in postings over the years: “Goodwill” is…
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 than our own. Now would also be…