Friday, July 31, 2009

FASB is killing the US economy

Federal Accounting Standards Board that is. Accounting is supposed to be the act of adding up income and expenses and computing how much money a company made. T.J. Rodgers of Cypress Semiconductor says that new FASB rules make it impossible to do that anymore. Companies are not allowed to show cash payments for shipped product as income, are required to carry "intangible" assets on their balance sheet, and cannot give their employees stock options except at ruinious cast.
As an example. GM carried $35 billion dollars worth of "tax write offs" on it's balance sheet for years. Just a few months before filing for bankruptcy did GM write these "assets" off. These "assets" could not be sold, could not be exercised, and were totally worthless, but for years they had made GM look like it had $35 billion more than it really did. I don't know what FASB calls this, but I call it fraud.

No comments: