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From: | "tennyson@caverock.net.nz" <tennyson@caverock.net.nz> |
Date: | Mon, 03 Nov 2003 23:28:38 +1300 |
Hi mixtrader, > >One of the problems I see is in obtaining a good assessment of the >firm's earnings - reported earnings are based on generally accepted >accounting principles (GAAP) which calculate depreciation based on IRD >"rules of thumb" rather than true rates of depreciation. > My understanding is that some of these depreciation and goodwill amortisation issues are being addressed as NZ moves towards more internationally accepted accounting rules. > >Also, > methods of valuation of the firms assets (in particular inventories, > but also fixed assets, brands and goodwill) and the treatment of > certain classes of expenditure (capitalised and depreciated, or fully > expensed over current year) can impact on reported earnings. > Do you have any particular concerns that AIA has distorted their accounts with regard to these specific issues you have raised? > >The revaluation of assets can be particularly >distortionary to reported earnings. > I think in the case of AIA the land revaluation, at least as it has been handled so far, is justified. Land does not depreciate and to have it stuck on the books at some historic snapshot value seems to me to be equally distortionary 'the other way around'. The airport land has been revalued in accordance with the level of income that can be derived from it. Given the scarcity of the land on what is a unique site, I cannot see that is liable to plunge in value during any future property cycle in the way CBD office buildings do. However, although in theory an ideal stay in New Zealand (from the point of view of AIA) would be to have the airport so grid locked that incoming passengers are forced to spend hours at the site spending money, I think most passengers want to 'get the hell out of there' as fast as possible. SNOOPY -- Message sent by Snoopy on Pegasus Mail version 4.02 ---------------------------------- "You can tell me I'm wrong twice, but that still only makes me wrong once." ---------------------------------------------------------------------------- To remove yourself from this list, please use the form at http://www.sharechat.co.nz/chat/forum/
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