Rewriting Pension History. Some big firms move to recognize Gain or Case Study

Rewriting Pension History. Some big firms move to recognize Gain or loss in the year they occur - Case Study Example Instead, these companies would now take into account such gain as well as losses in the corresponding year of their incurrence. The mentioned companies did so, in order to make their income look superior in the upcoming years. The companies claim that the change would make their income reporting additionally transparent and that the prevalent low rate of interest made this a suitable point in time for the change in practice. The change in the practice is on the face of the criticisms for the fact that the present accounting rule can have a considerable impact on the income of the companies for years. The current accounting system concerning the pension assets are very ambiguous and do not provide any information to an investor about the gains or losses in the pension assets in a particular year. The actual gain or loss of a particular year is significantly affected due to the distribution of the previous years’ gain or loss values over a period of time. This practice propagated by Financial Accounting Standards Board does not comply with the matching principle either.  For instance, Honeywell, AT&T and Verizon had huge values of unrecognized losses as on 2009, viz. 55%, 49% and 43% of the pension assets respectively. The non-recognition of these losses on the income statement of 2009 would have an impact on the actual earnings of the companies in the coming years. Though these companies consider the latest mark-to-market strategy to be preferable due to its simplicity, the anticipated rise in the interest rates could also help their pension plans. The high rate of inter ests would lower the value of the companies’ future pension obligations due to the discounting effect. The reduced pension obligation would result in lowered interest expense to be paid by the companies and hence enhance the performance of the pension assets and lead to superior earnings. However, this change involves potential risk for the shareholders of the

Book Review 2 Essay Example | Topics and Well Written Essays - 750 words

Book Review 2 - Essay Example Other factors that led to its growth were the visionary leadership of Jerry Heffernan. The text locates the mentor of Heffernan, Frank Howard and how his effect was carried onto Howard’s son! Led by Forward, the empire started to expand after completing a couple of years from operating on a profitable basis. This phase saw the group acquire a second electric furnace along with a new rolling mill capable of rolling mid-sized structural up to 18 inches. The text then records how the company overcame a short time cash crisis and began generating cash flow from 1984. During the entire 80’s the company followed a period of continuos growth. In 1984, it was recognised as one of the best-managed plants in the United States. Throughout the period experiments and improvements were carried on and a lot of things were attained like the concept of casting beam blanks as opposed to billets. Interestingly, the text records that the improvements were not made on massive investments and capital but by innovative planning and implementation of those novel ideas. The text makes it clear that although Chapperal’s gloats over its technological prowess, the underlying human resources practices and resulting culture are the main reasons for its success. It illustrates upon the credo of pushing decision making policy of the management and the policy of ensuring self empowerment of the different sections of the company and how it has worked wonders for them. The blend of trust, responsibility, knowledge, expertise, competence and authority has been pointed out as the main factors for the astounding success of the company. The text also points out the challenges that lie ahead for the company, especially its dream of recycling 100% of automobiles. The text shows that the important lesson that is to be learnt from the Chaparral Company is the manner in which it has been able to convert its potential to