Ford to make accounting change to reflect state of recovery

Article by Christian A., on March 4, 2011

After Ford Motor Co. earned $9.3 billion in the last two years, it’s likely to make an accounting change this year to reflect confidence in its recovery. A tax expert said that this move could add up to $13 billion to net income.

In the second half, Ford may eliminate from its balance sheet an allowance held against its deferred tax assets, according to its federal filing this week. It was in 2006 that this reserve was created as Ford started posting four years of operating losses.

Robert Willens, president of Robert Willens LLC of New York, a corporate tax specialist, said that eliminating the allowance may add $10 billion to $13 billion to Ford’s net income this year. Willens considers this as a “very positive statement from Ford."

He added that if a carmaker takes the “radical step” of removing the valuation allowance, then it means that it has a high degree of confidence in its future profit-making ability.

Willens pointed out that in Ford’s Feb. 28 10-K filing, it revealed that its valuation allowance at the end of 2010 was $15.7 billion, which makes it one of the five largest among U.S. public companies. He said that as soon as the company has entered a sustained period of profitability, it must remove the item from its books. [via autonews - sub. required]

If you liked the article, share on:

Topics: ford, united states

Comments

Recommended

Honda this week announced that its all-new 2018 Clarity Plug-in Hybrid will arrive at US dealerships with a starting price of $33,400 beginning on the first of December. Because the...
by - November 21, 2017
Lamborghini had been expected to refresh its entry-level model – the Lamborghini Huracan – in late 2018 or early 2019. But here is some good news for fans of the...
by - November 20, 2017
The Chevrolet Corvette will be turning 65 years old in 2018, and as part of the celebrations, the brand is introducing a special edition C7 – the Chevrolet Corvette Carbon...
by - November 19, 2017
Tesla revealed that with its new Semi, truck drivers can expect better experience especially with heightened safety and the lower cost of transporting cargo. Indeed, the cabin of the new...
by - November 19, 2017
November 17 is considered a very special day for Tesla, as this is the day that they revealed the highly anticipated Tesla Semi. But Elon Musk did not think the...
by - November 17, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries