Foreign earnings rule would reduce profits of multinational firms

Article Abstract:

Under a Financial Accounting Standards Board (FASB) proposed change, multinational U.S. firms may have to recognize earnings from foreign sources in the year earned, despite the lack of receipt of such earnings, which would increase these companies' tax base and reduce their profits. The proposal to include unremitted foreign earnings on the balance sheet would not affect companies whose foreign subsidiaries operate in countries with tax rates higher than those in the U.S., and would not affect foreign earnings for which the aggregate tax rate is 46 percent or higher. Critics of the proposal note that changing the accounting standard may erode debt to equity ratios and shareholders' equity, thus reducing a company's debt rating and adversely affecting its ability to borrow funds. The FASB proposal would also tend to discourage U.S. companies from expanding into foreign markets.

United States, Analysis, Economic aspects, International aspects, Profit, Profits, International business enterprises, Multinational corporations, Products, Balance of trade, International competition (Commerce), International competition (Economics), Commerce

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Defined benefit sponsors must start following new pension accounting rules

Article Abstract:

The final pension accounting rules issued in December, 1985 by the Financial Accounting Standards Board (FASB) incorporate changes made in response to corporate objections to FASB's March 1985 exposure draft. Most of the rules are effective for fiscal years beginning after December 15, 1986, but corporations should begin to assess the impact of the new FASB requirements on their accounting systems. Changes in the final FASB document are designed to reduce pension earnings' volatility as reported on financial statements. The new regulations may lower pension expense and, in some cases, create a credit to income on financial statements.

Laws, regulations and rules

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Treasury managers react to new pension accounting rules

Article Abstract:

The new regulations promulgated by the Financial Accounting Standards Board with regard to accounting for pension plans provided by employers will increase the accounting expenses relative to such plans. Two treasury managers discuss these cost increases and what they will mean to the corporations providing pension plan programs for their employees; Charles Toder of AMAX Inc. and Howard Doerr of US West Inc. explain in some detail the accounting techniques required by the new standards. Other controllers and financial managers comment on the accounting calculations required by the new standards as well.

Pensions, Employee benefits

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