Financial Accounting Blog

Friday, August 20, 2004

Capitalizing Costs. It's the age-old problem in accounting. You spend some money and you make a credit to cash--- but what do you debit, an expense or an asset account? The WSJ reported that some analysts are concerned that Helen of Troy is capitalizing costs in inventory (asset) that should have been expensed immediately.
"According to the paper some analysts said Helen of Troy's decision to put some costs together with inventory instead of treating them as quarterly general and administrative expenses% may have inflated earnings by more than 5 percent in its last fiscal year, more than 9 percent the year before% and nearly 16 percent in the year prior to that."

Thursday, August 19, 2004

Wow. According to Accounting Web, auditor turnover is running at a furious pace.
"By the end of last month more than 900 businesses said goodbye to their auditors - about the same number as in all 12 months of the previous year. However, nearly 700 of the 900 companies in a recent survey on auditor turnover gave no reason at all for the change according to the Wall Street Journal."

Monday, August 16, 2004

Too Much Information? The management of Clear Channel Radio does not believe that investors know how to use information provided to them. To help them out, Clear Channel announced that they will no longer be providing weekly ad-sales information, but rather monthly totals.