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Accounting News Roundup: Debt Valuation Adjustments; Valeant: Still Weird; Counting Pages of the Tax Code | 11.12.15

Lease-Accounting Overhaul Gets Green Light, Could Swell Balance Sheets by $2 Trillion [WSJ]
The FASB approved its lease accounting overhaul yesterday; chairman Russ Golden called it "a good improvement" that will "increase transparency around the balance sheet." Although leases got all the attention yesterday, there's a bit of additional news worth mentioning:

Also Wednesday, the FASB agreed in principle to proceed with a fix for banks’ “debt valuation adjustment,” or DVA—big, counterintuitive gains and losses caused by changes in the market value of banks’ own credit, which banks say have repeatedly distorted their earnings in recent years. Under the FASB’s fix, first proposed in 2013, those gains and losses will be stripped out of net income and counted instead as part of “other comprehensive income,” a separately reported measurement of nonoperating earnings.

You might recall, the DVA adjustment has caused a lot of controversy ("single worst accounting standard ever") since it was put in place in 2007. The fun won't end immediately, as its inclusion in OCI will take effect for fiscal years in 2018. although banks can adopt it early if they so choose.

The Curious Case of Mr. Pearson’s 502,996 Shares [Roddy Boy/SIRF]
The hits keep on coming for Valeant and its CEO J. Michael Pearson. Roddy Boyd's latest post notes that Valeant awarded Pearson those 502,996 shares "in error." This happened when Valeant's share price was $84.47 on May 23, 2013 and everything was fixed on March 11, 2014 when Pearson cut a check for the cost of the shares "on the date of delivery" plus interest. So, I guess that sounds like a loan? It's still weird that an error of that magnitude would a) happen and b) not be fixed for nearly a year. Then again, this is Valeant and there are billionaires trading hilarious verbal jabs over it, so maybe it's not all that weird.    

Is the Tax Code Really 70,000 Pages Long? [Slate]
I stumbled across this old Slate post about the length of the tax code and I thought I'd share it again mostly because presidential candidates say silly things. Andrew Grossman of the Joint Committee on Taxation traced the often-quoted "70,000 pages" back to Tax Foundation, saying they base that number on the CCH Standard Federal Tax Reporter. He calls that, "patently ridiculous" and says the code is more like 2,600 pages long. The Tax Foundation responded to this, of course, showing their work. It's all pretty petty and fun, which gives you the perfect excuse to call bullshit on the next person who claims the tax code is 70,000 pages long. Just to see how it goes.

In other news:

  • "Ten years from now, I'd like to have a very flexible work schedule in accounting." [IS]
  • Comparing the 2016 Presidential Tax Reform Proposals [Tax Foundation]
  • The Five Biggest Myths About Saving Money, According to a Millennial [Bloomberg]
  • In case you need to carry around $1 million. [Quartz]
  • Give up Facebook. []