Volume 7, No. 15

 

1998: Accounting Issues Review & Preview:  1998 was a banner year for accounting headlines. Names like Cendant and Sunbeam became synonymous with accounting legerdemain; in-process research & development charges became a national mantra; and after a few years of relative calm, "restructuring" appeared to be making a comeback as the corporate national pastime. If you were able to ignore the media blare and instead looked at the output of the accounting policy makers - the FASB and the Accounting Standards Committee (AcSEC) of the American Institute of CPAs - you saw some impressive standards being produced. Some of them will become effective in 1998, and a brief preview is provided here. Why should analysts care about new standards? Simple: all standards have their roots in some financial reporting flaw or industry practice that yields economic information that is less than faithful to the events that actually occurred. In a year where "earnings management" became a regulator's battle cry, analysts ought to be compelled to learning more about new standards. Understanding the underlying issues helps an analyst come to grips with investment issues of which he or she might otherwise be unaware. Pure selfish motivation and an inquiring mind ought to be enough to make an analyst or investor care. Satisfy your inquiring mind with this recap of the major FASB and AcSEC pronouncements that will change financial statements in 1998 - and then recall some of the more notable events of the year.

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