This article raises several interesting questions, one of which is whether exec comp should be linked to non-GAAP metrics.
With respect to inflation and LIFO, what would you prefer as CFO: maximizing earnings or minimizing taxes?
Do you agree with the FASB’s reasoning to drop separate lender accounting for troubled debt restructurings?
Do you think the change in lessor accounting was to fix an “oversight” in the standard? Or, was the FASB bowing to pressure?
Are you concerned that operating income (EBIT) could be misleading? Should the FASB try to standardize operating income?
If you were a research analyst, would you challenge a CFO on its EBITDAC (C=”Covid”) and other such non-GAAP measures? If so, why?
Are you surprised at the amount of loan loss provisions at GS, JPM, C? What does it signal about the economic outlook in general and about the firm specific outlook? Can you do the journal entries? Are they cash or non-cash? What is the cash flow effect?
Yes, firms really do do adjustments to accruals, closing entries, etc. and close the books each quarter, but now remotely. Side-by-side communications speed the process, but now it’s remote. Could you adjust?
Say you buy 5,000 Libras. What’s the journal entry? How to you account for the Libras after you buy them?
AZZ dismissed one accounting firm for another. What kind of questions would you have as an investor about the reasons for the dismissal?
If you were the Uber CFO selling the IPO to bankers and investors, why would you want to use non-GAAP measures? Which ones would you choose?
Do you think that changes in the lease accounting standards will affect a firm’s leasing policy? Can you think of situations where accounting standards have affected firms’ decisions?
Sherwin Williams is in litigation regarding lead paint. The case cites ads the firm ran in the early 1900s. If you were the firm’s CFO, what would you do with respect to disclosure requirements? Would you need to book a contingency? If you were the firm’s corporate counsel, what would you tell the CFO with respect to formally recognizing the contingency?
Dunkin’ Donuts plans to spend $100 million on “brand refresh.” DD does not own any of the stores, rather DD uses the franchise model. How will DD account for the amounts of the brand refresh that is spent on 1) equipment 2) technology infrastructure 3) training? Capitalize? Expense?
For revenue recognized over time on long term construction contracts, what are the estimates that firms make? How do these estimates affect when and how much revenue and profit are recognized? Is there any reason why a firm would not want to divulge these estimates, or changes in these estimates?
