GLG News by Mr. Nitish Grover FCA, AICPA Intl Associate, Principal, Owner
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Lease Financing - Not about Accounting Alone
December 20, 2007
Report : Lease Financing on the Rise | www.cfo.com
The referred article says that more than half of $1.1 trillion invested last year in equipment etc. was financed through credit and leases It says that pending changes in accounting for leases (SFAS 13) would probably be prospective in nature and that is why all this borrowing is taking place. In my opinion any changes would apply to both existing and prospective leases and the reason for borrowing through leases is probably related to a need for capital. In my analysis below I also look at some of the aspects of operating and financial leases.
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December 13, 2007
AMD Warns of Material Goodwill Charge | www.cfo.com
AMD has just announced that it will take a material charge on account of goodwill while Unify Corporation has also stated that it will restate its results on account of errors in accounting for goodwill. The FASB has revised SFAS 141R and requires companies to follow fair value accounting for goodwill on year to year basis. Also negative goodwill and bargain purchases is to be immediately recognized.Considering that goodwill accounting involves valuing value of the minority or non-controlling interest this creates problems. This analysis looks at some of these aspects.
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Subprime Crisis - Changing Equations - Effects on Global Banking
December 13, 2007
UBS Records a Big Write Down and Sells a Stake | www.nytimes.com
The announcement by UBS of a $10 bn writedown and financing from Singapore and the Middle East coming so soon after Citigroup took financing from Dubai points to a shift in banking industry financing and control. Consider also the latest moves by the Fed in the direction of rates and arrangements with other Central Banks to organize funding for banks and you have a catastrophic situation. In this analysis I take a look at where this is heading and the effects on risk analysis and management in financial sectors.
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A Look at Certain Capital Gains Implications for American Companies in Indian M&A Deals
December 10, 2007
CBDT reopens 400 PE, M&A Deals | economictimes.indiatimes.com
A number of companies from America and other countries are engaging in M&A deals in India.The Indian Government and tax authorities have decided to look at the detailed tax implications of all such deals. In a number of cases large tax demands have been raised. This trend has picked up after the Vodafone deal involving companies based in HongKong, UK and India. In this analysis I look at the capital gains tax implications of such deals.
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Risk, Fair Value and Asset Valuations in a Accounting Context
December 3, 2007
Crazy Little Thing Called Risk | www.nytimes.com
The referred article contains an interesting anecdote and brings to my mind the conundrums that companies are going to face in the valuation of financial assets and liabilities in the context of SFAS 157 which views fair value in a market context.When looked at in the context of the subprime crisis, the decline in the value of banking assets and the effects of Fed policy on market capitalization of financial assets this raises several interesting questions. I look at some of these aspects in my analysis.
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The Changing Cost of Carbon on Corporate Profits and Accounting
November 26, 2007
Climate Change : Green Protectionism | www.economist.com
Environmental costs are becoming real business costs. As time progresses, the Kyoto protocol is being renegotiated and taxes on carbon are being considered in various forms. The carbon trading and control debate also will have its effects on corporate profits and accounting. As new rules come in for carbon trading and control one can expect different and new accounting standards on how the cost of carbon should be accounted for in corporate profits. In this analysis I look at how these related aspects will effect business and accounting development.
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Budgeting and Financial Analysis
November 12, 2007
Budgeting : Seeing The Future | secure.eloqua.com
Budgeting and financial analysis has always occupied pride of place in organization planning and control. In so far as investment planning is concerned budgeting has not got the importance that it deserves. In this analysis I look at the concept of the Capital Asset Pricing Model (CAPM) and how it relates to investment analysis.
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The Relevance of Actvity Based Costing in Evaluating Corporate Performance
November 8, 2007
Time Driven Activity Based Costing | papers.ssrn.com
Activity based costing has made major strides since it was introduced nearly 20 years ago into the mainstream of accounting and cost analysis. ABC analysis has however not yet made much of an inroad into assessing the quality of corporate profits. In this analysis I look at how ABC can be used for assessing corporate performance
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Subprime Crisis - Valution and Risk Conundrums - Accounting Perspective
November 5, 2007
Credit Crunch has Accounting Bite | ifrs.pwc.com
The referred article refers to the valuation and risk disclosures to be made by companies and financial institutions. In this analysis I look at the problems facing companies as they undertake to finalize their accounts and the kind of risk and disclosure conundrums that they may face in this regard.
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Marginal Costing - The Relevance for Financial Analysis
November 2, 2007
Microsoft vs. Google : The New Battle for Control of Your Network | seekingalpha.com
Cost management and analysis is a very important aspect of financial planning and financial statement evaluation. Cost data and especially marginal and differential cost data can play a very important constructive role in this arena. Marginal cost has not been given the due importance it deserves in this area for reasons that I am unable to decipher. In this analysis I take a look at the importance of marginal and differential cost as applied to evaluation of corporate financial statements.
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Certain Tax Implications for US Companies Doing Business in India - Transfer Pricing
November 1, 2007
Tax Relief for Firms Engaged in Trade with US | www.business-standard.com
The plethora of Double Tax Avoidance Treaties (DTAA) which the US has with various countries are meant to lubricate the wheels of international commerce for US Companies. The Indian government has now decided to extend the benefits of the DTAA which India has with the US to Indian companies doing business with the US. This will have major beneficial implications for US companies doing business in India which I examine in this analysis.
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Merrill Lynch - Subprime Writedowns - The Industry Future
October 30, 2007
O'Neal Leaves Merrill after Record Writedown | www.ft.com
The departure of Stanley O'Neal after a major writedown signals an epoch changing event in the financial services industry and epitomizes the effect of excessive risk taking in a industry which should be risk averse. In this analysis I look at the signals which the financial services industry is receiving and what this means for the subprime and other weak investment banking segments.
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Cash Flow - The true reflection of financial health - Misleading Indicators
October 29, 2007
Cash Flow Manipulation – Analyzing and Identifying | theharrissolution.com
Cash flow and profitability manipulation are two age old devices used by unscrupulous managements to mislead investors, lenders and a host of other stakeholders. In this analysis I look at how the constituents of cash flow are a better indicator of financial health than pure profitability or asset/liability figures.
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IFRS - US GAAP - The steamship gathers speed at a global level
October 22, 2007
Concept Paper on Convergence of IFRS | www.icai.org
The accounting standards convergence steamship is gathering speed at an accelerating pace and emerging markets are embracing the same. In this context the initiative in India to fully embrace IFRS by 2011 should be seen in the context of the FASB-IFRS convergence project. In this analysis I look at convergence from a global accounting standards perspective and the implications for investors and companies based outside India and especially in the United States.
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The Subprime Crisis and the Mitigation of Risk
October 22, 2007
One World, Taking Risks Together | www.nytimes.com
The subprime crisis has brought to the fore the risks of interconnected markets and the linking of markets. In this analysis I take a look at the subprime crisis in the light of risk mitigation and valuation of CDO investments in the light of the comment by Bernanke - "I'd like to know what those damn things are worth".
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The Endeavour to Make Eminent Sense of Financial Statements
October 22, 2007
Seeking Clarity - The Battle against Complexity Heats Up | www.aicpa.org
The SEC has formed a committee to look at ways to simplifying financial reporting. In this analysis I look at what steps may be taken to simplify financial reporting and make eminent sense of the same for users, preparers and auditors. The fact that financial statements are used for multifarious purposes make the matter more complex and therefore I look at the subject both from a user as well as auditor perspective.
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Standards Convergence - Divergences of Opinion - Where do we go further
October 18, 2007
IASB Warns Europe on Accounting Standards | www.ft.com
All governments are wary of the power to lose control.So it is with accounting standards. While the US is moving closer to convergence with IFRS, Europe is adopting a divergent trend as is apparent with the efforts in the area of IAS 39 - Financial Instruments and IFRS 8 - Segment Accounting. In this analysis I take a look at this phenomenon and where it is heading.
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Debt Markets and Banking - Sub prime Accounting - A Century Later - What Lies Ahead?
October 16, 2007
Super Fund Helps Ease Markets | www.ft.com
From 1907 to 2007 a hundred years have passed but the nature of crisis facing the banking system continues. In 1907 it was JP Morgan who stepped in to rescue the banking system from the then subprime crisis. It is today Morgan, Citi and BankAm which are stepping in. In this analysis I take a look at where the subprime crisis is heading and what to expect in terms of the effects on accounting and banking.
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Subprime - Hedge Funds - Markets - Changing Equations
October 9, 2007
EU plans market reforms to avert crisis | www.ft.com
The recent subprime crisis has brought to the fore lacunae in capital markets at their current stage of development. A lot is being said in different forums on how to correct these deficiencies. In this analysis I look at the nature of changes which may be expected in capital markets at a global level.
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Indian Economic Environment - Developments in Indian Capital Markets
October 8, 2007
Surge in India's Markets Creates Some Overnight Global Giants | www.nytimes.com
The US subprime crisis has created opportunities and problems. The Indian economic figures having been giving strong signals leading the markets in India to be on a continuous upward roller coaster. In this analysis I look at the pitfalls facing the Indian markets and the reasons why caution should be exercised while evaluating companies operating in the Indian economic environment.
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