EBITDAP and other pension “magic”

The Dow was at about 14,000 during October-November 2007 and at about 7,000 in February 2009. This resulted in losses in many companies’ pension funds. Many companies had unrealized losses exceeding the 10% corridor boundary, which meant the “excess” losses had to be gradually amortized into pension expense under U.S. GAAP.  For example, in 2009-2010 [...] Read more > >

Researchers Make Suggestions for Lessor Accounting

I have been reading a recent paper by Mark Bauman (Univ. of Northern Iowa) and Richard Francis (Univ. of Texas – El Paso) published in Accounting Horizons (June 2011) on the topic of lessor accounting. For those academics who follow this standard setting topic, you already know there is a relative dearth of research that [...] Read more > >

SEC Roundtable on IFRS

On Thurs, July 7, the SEC will hold a roundtable on International Financial Reporting Standards. The agenda (available here) looks to cover aspects of the Work Plan with particular emphasis on investor, small company, and government preparedness. The event will be webcast and is scheduled to run from 10 am to about 4 pm in [...] Read more > >

What is Financial Statement Comparability?

As with many terms in financial reporting, the term comparability means different things to different people. Recently, I’ve read a number of papers that shed academic light on financial statement comparability, which means that the researchers had to define what they mean by comparability and then select an appropriate proxy for that construct. In this [...] Read more > >

A Little Discretion Here, A Little Discretion There

Lease accounting has received a lot of attention recently, given the fairly substantial changes being proposed by the FASB and the IASB in their joint project on lease accounting. One area of lease accounting that hasn’t raised as much discussion is how to account for short-term leases (i.e., leases with terms of less than one [...] Read more > >

Is it time to “fix” accounting for pensions?

On June 16, 2011, the IASB released its amendments to IAS 19 (Employee Benefits).  David Zion, accounting research analyst for Credit Suisse, reviews the implications of the amendments and concludes that “now it’s FASB’s turn” to “fix” pension accounting. In fact, he recommends that the FASB simply expose the new IASB rules, as is, to FASB [...] Read more > >

Own Credit Risk

I have started to think recently quite a bit about firm’s own credit risk and I think it is an area research has the potential to be helpful to standard setting. Barth Hodder and Stubben (TAR 2008) investigate the association between equity returns and credit risk changes. Consistent with Merton (1974), the relation between credit [...] Read more > >

Sir David Tweedie is an “Accounting Rock Star”

…or so says The Economist in this article. While I generally think highly of the The Economist, this article contains one of my pet peeves, which is a loose discussion of fair value. In particular, the article states that “In 2009, under its previous chairman, Bob Herz, FASB narrowly voted 3-2 that all assets should [...] Read more > >

Program Accounting for Costs

The IASB/FASB recently affirmed an earlier decision not to rewrite standards on inventory cost accounting as part of its revenue recognition project.  Other than the limited guidance already covered in the proposed new standard (on topics such as setup costs for service contracts, precontract costs, and inventory of a service provider), the boards have left [...] Read more > >

Good Book versus Bad Book

No I am not going to do a book review on financial instruments. This is an interesting concept being considered as part of the financial instrument project. As many of you already know, the FASB is attempting to develop a single impairment model for financial instruments. In January, the Boards issued a supplementary document that [...] Read more > >