Is It Time to Eliminate Depreciation for Good?

This past August, the Financial Accounting Standards Board (FASB) asked for input regarding four possible agenda items: Intangible Assets, Pensions, Liabilities and Equity, and Performance Reporting.  Paul B. W. Miller and Paul R. Bahnson from Accounting Today favored pursuing radical reform for all four and suggested a more aggressive fifth reform. 

FASB Change Reduces CostHere’s our proposed addition: Depreciation

It’s well past time to rectify the perennial misbelief that systematic depreciation produces useful information and eliminate its persistent significant contamination of financial statements.

As for us, we spell depreciation “duh-preciation” because it’s an obsolete, naive, ignorant, crude, ultra-simplistic, lazy and otherwise unsophisticated response to urgent demands for useful information about productive assets. 

So, what’s the problem? Annual duh-preciation is based on the false premise that value is always lost and never gained, and it is not observed but calculated by combining a single dubious fact with these three unverifiable predictions:

  • Capitalized cost is a fallacious measure of original value because it’s based on the buyer’s sacrifice, instead of the obtained economic utility. (Even if cost somehow could equal value, it would quickly lose that equality.)
  • Service life cannot be validated until the asset is taken out of service.
  • Salvage value cannot be validated until the asset is sold.
  • The allocation pattern is a speculative conjecture that cannot possibly coincide with actual future value changes.

The conclusion is indisputable: The consequence of combining this premise with these false and literally unknowable factors makes duh-preciation a complete fabrication that has no correlation with any real results of real events. If that conclusion is valid, then accountants are both irrational and irresponsible to report these expedient imaginary numbers as if they are facts. 

Without doubt, systematic duh-preciation leaves abundant havoc in its wake in the form of contrived numbers that masquerade as useful information. This practice pollutes every reported measure it touches, especially assets, cost of goods sold, operating costs, and, of course, earnings. It also ruins return ratios by putting spurious numbers in both the numerator and denominator.

In light of all the duh-preciation debris strewn throughout the statements, is it any wonder that stock prices and earnings numbers aren’t strongly correlated?  

Whenever we bring up these shortcomings, accountants rationalize the status quo with the same 180-year-old excuse that there are no available methods for estimating tangible assets’ market values. This shortsighted excuse is embarrassing! After all, if estimation techniques are readily applied for impairments and combinations, then why not use them everywhere? 

After 180 years, it’s long past time to get real about valuation instead of acting like bogus duh-preciation and impairment numbers are relevant and reliable when they’re neither.

Read The Full Article Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Presidential Debate Stirs Up Tax Claim Controversy

As expected, taxes took on a prominent role in the presidential debate this past Monday evening. Hillary Clinton and Donald Trump presented have different plans for U.S. economic policy should they win in November and the candidates mentioned taxes over 40 times throughout the course of the debate. However, according to Scott Greenberg in a post on Tax Foundation points out that several of the claims that both Clinton and Trump made about tax policy were incorrect or misleading:

presidential-debate-stirs-up-taxThe Great Recession was caused by tax policy

Throughout the debate, Clinton continually criticized Trump for his plan to cut taxes for the wealthy, arguing that lower taxes on the rich would not help the U.S. economy. But at one point, Clinton went even further, claiming that tax cuts for the wealthy helped lead to the recession of 2008:

CLINTON: Well, let’s stop for a second and remember where we were eight years ago. We had the worst financial crisis, the Great Recession, the worst since the 1930s. That was in large part because of tax policies that slashed taxes on the wealthy, failed to invest in the middle class, took their eyes off of Wall Street, and created a perfect storm.

There is little evidence that federal tax policy had much to do with the Great Recession. Most economists agree that the economic downturn was caused by increased systemic financial risk coupled with a housing bubble. While there are some theories that trace these conditions back to U.S. tax policy – for instance, that the exclusion of capital gains on home sales, passed by President Bill Clinton in 1997, encouraged the housing bubble – these connections are tenuous.

Mexico uses its value added tax to harm U.S. exports

Trump’s first comment about tax policy in last night’s debate focused on the international competitiveness of the United States. Specifically, Trump pointed to Mexico’s value added tax as an example of how U.S. businesses are being hurt by other countries’ policies:

TRUMP: Let me give you the example of Mexico. They have a VAT tax. We’re on a different system. When we sell into Mexico, there’s a tax. When they sell in — automatic, 16 percent, approximately. When they sell into us, there’s no tax. It’s a defective agreement. It’s been defective for a long time, many years, but the politicians haven’t done anything about it.

Trump is correct that Mexico’s value added tax is border-adjustable – it taxes imports and exempts exports – but is incorrect that this puts U.S. companies at a competitive disadvantage. Making a tax border-adjustable just means that the tax applies to consumption within a country’s borders and not to goods and services that are consumed abroad. Most economists believe that border-adjusted taxes have no long-run effect on overall levels of exports and imports, because each country’s currencies can adjust accordingly. As my colleague Kyle Pomerleau wrote a few months ago, “A border adjustment is not a tariff, nor would it give [a country] a trade advantage.”

Read The Full Article Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Find Fixed Asset Detail with Global Search Feature

Depre123 is a cloud based application to manage fixed assets and generate a variety of depreciation reports on any desktop or mobile device. Get all of your depreciation answers based on just 3 key values (cost, date, asset class) and then utilize the open design to add all necessary fixed asset detail.

Whether you manage hundreds or thousands of assets, finding the details about an individual or group of fixed assets can be a challenge. Depre123 is built on the Salesforce platform and includes a global search feature to quickly locate information in Depre123. Here are some tips for better searching:

1. Auto Suggestions

find-fixed-asset-detail-with-global-1Type a keyword into the search box and the system will respond with some auto suggestions. The suggestions are based on recent items that you have opened. You can select a suggested item of hit enter to search all records.

2. Minimum Characters

You have to enter at least three characters in your search to get a set of matching results. Less than three characters will result in “No matches found” as shown below:

find-fixed-asset-detail-with-global-2

A search with three of more characters will return valid results.

find-fixed-asset-detail-with-global-3

3. Wild Cards

If you are not sure of the exact spelling, you can use the asterisk wildcard character to find any items that start with a given string. For example, ex* would find any items that begin with the letters ex. As you can see below, the global search will look at assets, reports, accounts, asset classes and people.

find-fixed-asset-detail-with-global-44. Search Options

You can use search options to limit the results to only the items you own or match an exact phrase:

find-fixed-asset-detail-with-global-5

Use “exact phrase” when you want to search for a complete phrase with two or more words. By default search will look for all of the words in each record. So “Fixed Assets” will search for both words but not necessarily together. Selecting Exact phrase will search for the complete phrase together.
find-fixed-asset-detail-with-global-6

The search options make it very easy to find all matching fixed asset data stored in Depre123. You can then select any individual record to see all the associated fields and depreciation calculations.

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Bassets-Depre123-MainPageBorder-10162014

Liz Lemon Isn’t The Only TV Character Who Would Make a Good CPA

Most of us love nothing more than a little escapism after a hard day’s work and an hour or so of TV usually fits the bill. But who among us doesn’t look at TV characters and think “I wonder how she would handle my job?” Well you are not alone. Amber Trimble from AICPA had the same thought. However she went one step farther. She went out, did some research and wrote an article about about what TV characters would make the best CPAs.

liz-lemon-isnt-the-only-tvFor help, we asked participants in the 2015 AICPA Leadership Academy for their suggestions, and they gave us six that we thought really fit the bill. These iconic characters shake up accountant stereotypes while emphasizing the valuable attributes that make CPAs stars in their own right. 

Leslie Knope, Parks and Recreation. “Knope would be a FANTASTIC CPA,” said Diego J. Baca, CPA, an assurance manager at EY. “Her integrity, wit, charm, ambition, and dedication to the stakeholders was unmatched by anyone in her fictional TV town.” Knope is involved in the government sector, and her love interest is a CPA specializing in auditing government entities.

Tyrion Lannister, Game of Thrones. Caleb Bullock, CPA, CGMA, business development manager at Somerset CPAs, P.C., said Lannister could put his wit and intellect to good use as a CPA. Bullock observed that, like CPAs, “he is an incredibly valuable resource to anyone he serves.” And he already has a motto that would be perfect on his business card, “A Lannister always pays his debts.” 

Liz Lemon, 30 Rock. Renee Bardenwerper, CPA, said that Liz Lemon “is serious when it comes to getting the job done.” Liz runs into a lot of hilarious trouble with her colleagues and staff on the show, but manages to maintain her position as the voice of reason.

Dwight Schrute, The Office. Alex Bybee, CPA, manager, Barnard Vogler & Co., shared his favorite quote from salesman Schrute: “Whenever I’m about to do something, I think, ‘Would an idiot do that?’ and if they would, I do not do that thing.” Bybee said, “He might drive clients crazy, but Schrute would be extremely efficient….”

Leroy Jethro Gibbs, NCIS. Gibbs is an investigator who is a former U.S. Marine scout sniper. Cheryl L. Exline, CPA, CGMA, tax manager at Arnett Carbis Toothman LLP, said, “Gibbs would make a good accountant. He is very observant. He is great at reading people and is good with details.”

Jerry Seinfeld, Seinfeld. Andrew Beyeler, CPA, tax manager at Lenhart, Mason & Associates LLC, said that Jerry has the characteristics of a great CPA: “Jerry is an organized, detail-oriented character who is often a voice of reason among his friends.” He is trustworthy, and his friends often come to him for help coping with their wildly unique problems.

Read The Full Article Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Fantasy Football Drains Productivity – And It’s A Good Thing!

College football has started and the NFL kickoff is right around the corner. That means it’s also the launch of the fantasy football season. With literally 10 of millions of Americans participating, it rivals the NFL itself in popularity! According to an article by Martha C. White in Money and new research from executive outplacement firm Challenger, Gray & Christmas, it also sets in motion a nearly $17 billion productivity drain for American companies.

fantasy-football-drains-productivityAccording to estimates, anywhere from 57 million to 75 million Americans participate in fantasy football. Roughly two-thirds of them also hold down jobs — jobs that can get pushed to the back burner when a fantasy draft deadline is looming.

Challenger crunched the numbers and determined that, across the country, every hour those fans spend revising their draft picks, researching stats, or engaging in other fantasy football activities cost employers nearly $990 million collectively. Over the course of the year, that number piles up to the tune of $16.8 billion.

Still…it would be a mistake for companies to launch a crackdown on all of these virtual leagues; thanks to the always-on expectation in many fast-paced workplaces. So even if the guy in the next cube over is fiddling with his roster over the course of the day, there’s no way to tell if he’s making that time up later….

(F)antasy football can have a positive effect on the morale of workers who play it, giving them a little bit of short-term, well, fantasy escapism that can break up the monotony of what for many can feel like a perpetual workday.

What’s more…fantasy football’s net effect on the economy is actually positive: Because each player spends an average of a little over $550 a year in various league dues and membership fees, research costs and the like, the hobby pumps nearly $32 billion into the economy — almost twice the amount lost to workday fantasy football distractions.

Read The Full Article Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.