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bigjku
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 11:44 am

The pattern here is amazing. False or highly exaggerated statements are made. Then they are called out and never responded to. Instead the respondent seizes on any small technical mistake made in any other post to continue the discussion.

The respondent has at one point in this thread claimed that nearly half the profits Boeing has ever made are accounted for in 787 deferred cost. Between that and other examples pointed out it’s clear that there is little to no accounting expertise on display or if there is there is a huge amount of bias that would lead to such dubious claims.

But those challenges are ignored. The tactics at this point are clearly to keep winning minor definitional points when the larger game is clearly lost.
 
mjoelnir
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 12:31 pm

bigjku wrote:
The pattern here is amazing. False or highly exaggerated statements are made. Then they are called out and never responded to. Instead the respondent seizes on any small technical mistake made in any other post to continue the discussion.

The respondent has at one point in this thread claimed that nearly half the profits Boeing has ever made are accounted for in 787 deferred cost. Between that and other examples pointed out it’s clear that there is little to no accounting expertise on display or if there is there is a huge amount of bias that would lead to such dubious claims.

But those challenges are ignored. The tactics at this point are clearly to keep winning minor definitional points when the larger game is clearly lost.


Okay I made a mistake, you called me out. Half of the retained earnings earnings of Boeing are canceled out by the deferred cost not out off all profits ever made.

That does not change a dota about what I talk about.

Let us start with negative equity and deferred cost, a minus of 26 billion USD more liabilities at Boeing than Boeing has real assets.
52 billion retained earnings shown and reality they are 28 billion USD. 12 billion USD when you minus the accumulated or other comprehensive losses.
61 billion USD inventories shown, 24 billion of them are deferred cost so real inventory is 37 billion.
The retained earnings are always inflated until the deferred cost are booked out.

Could you tell me how that is not a shell game, legal in the USA, but would be frowned upon everywhere else.

What would you call an accounting system that allows a company to show double the profit it really has. That allows to show inventories that are not there.

If you would have read the article I provided by the CAPjournal, you would have realized that Boeing has shown a higher profitability than Airbus since the 787 is manufactured up to today, while having in reality a lower profitability. All due to moving the profit or earnings thanks to program for cost accounting. What does that do to the comparability of company accounts between different companies in the same industry?

Could you answer to this points or are you chicken?
Last edited by mjoelnir on Fri Aug 03, 2018 12:37 pm, edited 1 time in total.
 
SFOtoORD
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 12:37 pm

mjoelnir wrote:
bigjku wrote:
The pattern here is amazing. False or highly exaggerated statements are made. Then they are called out and never responded to. Instead the respondent seizes on any small technical mistake made in any other post to continue the discussion.

The respondent has at one point in this thread claimed that nearly half the profits Boeing has ever made are accounted for in 787 deferred cost. Between that and other examples pointed out it’s clear that there is little to no accounting expertise on display or if there is there is a huge amount of bias that would lead to such dubious claims.

But those challenges are ignored. The tactics at this point are clearly to keep winning minor definitional points when the larger game is clearly lost.


Okay I made a mistake, you called me out. Half of the retained earnings earnings of Boeing are canceled out by the deferred cost not

That does not change a dota about what I talk about.

Let us start with negative equity and deferred cost, a minus of 26 billion USD more liabilities at Boeing than Boeing has real assets.
52 billion retained earnings shown and reality they are 28 billion USD. 12 billion USD when you minus the accumulated or other comprehensive losses.
61 billion USD inventories shown, 24 billion of them are deferred cost so real inventory is 37 billion.
The retained earnings are always inflated until the deferred cost are booked out.

Could you tell me how that is not a shell game, legal in the USA, but would be frowned upon everywhere else.

What would you call an accounting system that allows a company to show double the profit it really has. That allows to show inventories that are not there.

If you would have read the article I provided by the CAPjournal, you would have realized that Boeing has shown a higher profitability than Airbus since the 787 is manufactured up to today, while having in reality a lower profitability. All due to moving the profit or earnings thanks to program for cost accounting. What does that do to the comparability of company accounts between different companies in the same industry?

Could you answer to this points or are you chicken?


And what is the actual real world impact of this accounting treatment? Who are the harmed entities and how? Other than all of us for reading through your frothy rants.
 
Bricktop
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 12:44 pm

It is instructive to keep such threads open because it reveals the pathology of a certain type of poster. In this case it is the rabid anti-Boeing example. The only reason not to block him is for comic relief, as numerous almost universal posters have refuted his theories he resorts to narrower and narrower arguments so that the original premise of the thread is long gone. His ground has shrunk to the extent he’s now hopping around on one foot. Also amusing is that the usual suspects who might be expected to rally to the Boeing bashing are absent. Wisely, they are keeping their powder dry for a less tenuous assault.

Of course that original logic was based on another shot at the 787 program. It’s a money loser, Boeing can’t make a profit on it, the only reason AA and HA chose it over the clearly superior product from the favored and revered other OEM was because Boeing gives it away (see, deferred costs aren’t going down enough so they aren’t making money QED!).

Close the thread? It should be made a sticky!!
 
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Polot
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 12:47 pm

mjoelnir wrote:
bigjku wrote:
The pattern here is amazing. False or highly exaggerated statements are made. Then they are called out and never responded to. Instead the respondent seizes on any small technical mistake made in any other post to continue the discussion.

The respondent has at one point in this thread claimed that nearly half the profits Boeing has ever made are accounted for in 787 deferred cost. Between that and other examples pointed out it’s clear that there is little to no accounting expertise on display or if there is there is a huge amount of bias that would lead to such dubious claims.

But those challenges are ignored. The tactics at this point are clearly to keep winning minor definitional points when the larger game is clearly lost.


Okay I made a mistake, you called me out. Half of the retained earnings earnings of Boeing are canceled out by the deferred cost not out off all profits ever made.

That does not change a dota about what I talk about.

Let us start with negative equity and deferred cost, a minus of 26 billion USD more liabilities at Boeing than Boeing has real assets.
52 billion retained earnings shown and reality they are 28 billion USD. 12 billion USD when you minus the accumulated or other comprehensive losses.
61 billion USD inventories shown, 24 billion of them are deferred cost so real inventory is 37 billion.
The retained earnings are always inflated until the deferred cost are booked out.

Could you tell me how that is not a shell game, legal in the USA, but would be frowned upon everywhere else.

What would you call an accounting system that allows a company to show double the profit it really has. That allows to show inventories that are not there.

If you would have read the article I provided by the CAPjournal, you would have realized that Boeing has shown a higher profitability than Airbus since the 787 is manufactured up to today, while having in reality a lower profitability. All due to moving the profit or earnings thanks to program for cost accounting. What does that do to the comparability of company accounts between different companies in the same industry?

Could you answer to this points or are you chicken?

You don’t seem to understand that if Boeing was writing off these costs or if anyone was actually concerned Boeing would have made different decisions on how they used their money over the past 10 or so years (ie less dividends and stock buy backs).
 
marcelh
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 1:12 pm

Bricktop wrote:
It is instructive to keep such threads open because it reveals the pathology of a certain type of poster. In this case it is the rabid anti-Boeing example. The only reason not to block him is for comic relief, as numerous almost universal posters have refuted his theories he resorts to narrower and narrower arguments so that the original premise of the thread is long gone. His ground has shrunk to the extent he’s now hopping around on one foot. Also amusing is that the usual suspects who might be expected to rally to the Boeing bashing are absent. Wisely, they are keeping their powder dry for a less tenuous assault.

Of course that original logic was based on another shot at the 787 program. It’s a money loser, Boeing can’t make a profit on it, the only reason AA and HA chose it over the clearly superior product from the favored and revered other OEM was because Boeing gives it away (see, deferred costs aren’t going down enough so they aren’t making money QED!).

Close the thread? It should be made a sticky!!


There is a lot of shooting the poster in this thread. I don't think it's about bashing Boeing, but to make clear what the (dis)advantages are for Boeing (and the shareholders) by using Program Accounting, instead of using the more applicable accounting rules. Reading all those posts which are pointing out that the poster is totally wrong and biased, it cannot be that difficult to answer this queston? And please, just in plain and simple English, I'm not a beancounter nor a financial Einstein.
 
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Revelation
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 1:13 pm

Strato2 wrote:
Stitch wrote:
Yea it would. But frames are now making money and will be doing so for hundreds, perhaps thousands, to come for years and perhaps decades.

Too little. Too late.

That's at best your opinion and at worse an absurd statement.

Program accounting is giving us all the data we need to track the reduction of the deferred costs. The recent bumps in the accounting block along with writing off the loss on 747-8 (which ironically might have been premature!) shows us that the issue is being actively managed. We know the right amounts are being shifted between the right cells in the spreadsheet at the right times, and all is well with the world.

If you are at all serious about investing you should make the effort to understand how this all works and decide if this is something you want to be a part of or not. If you are not at all serious about investing you should pay someone else who is to manage your investments, otherwise you might as well be throwing darts at the wall.
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Wake now, discover that you are the song that the morning brings
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justloveplanes
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 1:30 pm

mjoelnir wrote:

There is a sweat hart deal. You are allowed to show more profits than you made, you can accumulate those profits. You are allowed to show assets that are not there and you can balance this non existing assets against liabilities, or you can show equity that you do not have.


There is no sweetheart deal. More tax is paid early during the program when cash flow is impacted most heavily because income and losses are balanced over whatever the accounting block happens to be. Aside from the untimely (negative to Boeing) early tax impact, it's all a paper exercise aimed at looking at the program over it's full life. This makes sense for evaluating the performance of a 30 to 50 year program.

Unless you can show how Boeing paying more taxes early in the program unfairly benefits them or shareholders, I can't see your point.
 
Bricktop
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 1:38 pm

marcelh wrote:
There is a lot of shooting the poster in this thread. I don't think it's about bashing Boeing, but to make clear what the (dis)advantages are for Boeing (and the shareholders) by using Program Accounting, instead of using the more applicable accounting rules. Reading all those posts which are pointing out that the poster is totally wrong and biased, it cannot be that difficult to answer this queston? And please, just in plain and simple English, I'm not a beancounter nor a financial Einstein.

Fair enough.

I can’t speak for others, but my criticism of the “controversy” over program accounting is SO WHAT?? It is all well disclosed as to how Boeing accounts for the 787 program. Now if they were hiding anything, I would be howling about that, but they aren’t. If anything there is additional transparency because the change quarter over quarter for the 787 line of business is broken out. I challenged him to short the stock if he has the SINCERE belief that Boeing is a house of cards.

As to shooting the poster, that only really comes from his motivations. If it was to have a legitimate discussion, well program accounting has been beaten to death on this forum, and he has had his say many times. My feeling seeing the title of the thread and his name attached to the original post was “Not this $#!t again” and that it was trolling.
 
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Momo1435
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 1:38 pm

Talking about the SEC and program accounting Back in 2016 there was some news that the SEC were investigating the practice of using program accounting on the 747 and 787 programs. I tried to find some more recent about this, but it's all from 2017 when this news came out. Does anyone has any more info if the SEC actually started this investigation or even better, if they finished it?

This (possible) investigation shows that it is also nonsense that the way that the program accounting was used by Boeing is completely acceptable in the US. The scale of the deferred costs for the 787 is not something that can just be waved away, it's too big no matter how you do the accounting. But as we have seen in this thread the issue is clearly not big enough to bring the whole company into real serious trouble is going way too far.
 
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Revelation
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 1:53 pm

Bricktop wrote:
It is instructive to keep such threads open because it reveals the pathology of a certain type of poster troll.

Fixed it for you.

Bricktop wrote:
In this case it is the rabid anti-Boeing example. The only reason not to block him is for comic relief, as numerous almost universal posters have refuted his theories he resorts to narrower and narrower arguments so that the original premise of the thread is long gone. His ground has shrunk to the extent he’s now hopping around on one foot.

Now on tippy-toes.

I suppose some day I might regret feeding the troll, but for now I just can't resist...
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
bigjku
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 1:58 pm

mjoelnir wrote:
bigjku wrote:
The pattern here is amazing. False or highly exaggerated statements are made. Then they are called out and never responded to. Instead the respondent seizes on any small technical mistake made in any other post to continue the discussion.

The respondent has at one point in this thread claimed that nearly half the profits Boeing has ever made are accounted for in 787 deferred cost. Between that and other examples pointed out it’s clear that there is little to no accounting expertise on display or if there is there is a huge amount of bias that would lead to such dubious claims.

But those challenges are ignored. The tactics at this point are clearly to keep winning minor definitional points when the larger game is clearly lost.


Okay I made a mistake, you called me out. Half of the retained earnings earnings of Boeing are canceled out by the deferred cost not out off all profits ever made.

That does not change a dota about what I talk about.

Let us start with negative equity and deferred cost, a minus of 26 billion USD more liabilities at Boeing than Boeing has real assets.
52 billion retained earnings shown and reality they are 28 billion USD. 12 billion USD when you minus the accumulated or other comprehensive losses.
61 billion USD inventories shown, 24 billion of them are deferred cost so real inventory is 37 billion.
The retained earnings are always inflated until the deferred cost are booked out.

Could you tell me how that is not a shell game, legal in the USA, but would be frowned upon everywhere else.

What would you call an accounting system that allows a company to show double the profit it really has. That allows to show inventories that are not there.

If you would have read the article I provided by the CAPjournal, you would have realized that Boeing has shown a higher profitability than Airbus since the 787 is manufactured up to today, while having in reality a lower profitability. All due to moving the profit or earnings thanks to program for cost accounting. What does that do to the comparability of company accounts between different companies in the same industry?

Could you answer to this points or are you chicken?


Sure. I and others have answered most of these but I will do it again.

Regarding the negative equity I posted the following.

While your language here is a bit garbled I don’t think anyone has disputed your fundamental premise that Boeing has a negative equity position. Not that such position would be increasingly negative with a large charge off.

What you consistently refuse to acknowledge is that no one involved cares. And that isn’t just investors but it’s counter-parties who hold all those liabilities.

The banks and bond holders providing the $10 or so billion in actual debt don’t care. They haven’t called their loans. They haven’t refused to renew them. Boeing issues debt at low rates. Clearly they don’t see risk.

The people who are owed payables of any size all do a credit assessment on their counter parties. They allow Boeing to pay on agreed upon terms and as you point out effectively give them product for cash to come later. They aren’t reducing their terms because they also don’t see a risk. This can and does happen. Less favorable terms are extended to weaker companies both in terms of price and when payment is due. See BBD and the CSeries for an objective lesson on this.

Shareholders haven’t sold off their shares. While some may be stupid not all are. There is little substantial short action on Boeing. They also don’t see a risk.

Then we have to account for Boeing management. They have clearly not seen a need to increase balance sheet equity either. They haven’t been pressured by any of the above (and make no mistake if there was a substantial issue the lenders and bond holders can and will insert covenants on such deals as a condition of providing credit) and have made a deliberate decision to return cash rather than apply it to the equity position of the business. And he board of directors hasn’t disagreed with them.

So we have at least 4 groups of people all with different interest who don’t see a risk attached to having negative equity. We have a company that has deliberately passed on opportunities to remedy the same year after year after year.

Your issue on the negative equity issue is not that you aren’t right about it existing. But rather that you don’t understand the implications of it. Or if you prefer you understand it better than the shareholders, management, lenders and vendor counter parties all do and they are stupid. It’s quite possible you are one of the few sane people in the room. But at the moment the behavior of literally everyone else involved who has a cash stake in the game is saying this does not matter. That is an inarguable reality of what is going on right now.


I would also add airlines as a fifth group of stakeholders who are damn well going to examine the finances of their counterparties as well. Agin you may well be smarter than all the various counter parties to Boeing are. But I doubt it.

The impact on retained earnings is really just a subset of the discussion on negative equity so it doesn’t merit a separate response. The broader point is that there are many counterparties that have an actual financial stake in things that don’t care about the issue and likely understand it quite fine. Boeing has had every chance to simply fix the issue, if it was an issue, over the past several years and has taken actions that specifically don’t fix it. I am forced to conclude that they are their counter parties don’t see it as an issue. So I am on the side of Boeing management, their lenders, their shareholders, their vendors and their customers who all have not made an issue of it.

I wouldn’t call the accounting system anything. Having seen many different levels of accounting what matters the most is that you understand the basics of what is going on. There is a whole world of smaller businesses that don’t have audited financial statements. If you work with those you learn to sort out what is important and understand the various strange ways people do things. Boeing’s system doesn’t give me any particular heartache. I think most interested parties get it and aren’t at all bothered by the negative equity implications of it as evidenced by their behavior. And they have more at stake than you do.

I, and I assume many others here, have read the linked CPA article many times as you link to it compulsively. It’s interesting but stops in 2014. I am sure someone could carry the analysis thru to 2018 and I suspect we would see the Boeing has returned to being more profitable than Airbus on both accounting methods. It also mis-identifies the reason Airbus has a lagging market cap. That is primarily because it doesn’t return cash at anywhere near the rate Boeing does. When they do I expect their stock price to rise considerably.

Total returns, meaning stock price appreciation plus cash dividends show Boeing beating EADSY stock 268.3% over 5 years to 124%. Meanwhile on a percentage basis the stock price increases at pretty much in line. Boeing paid $12.2 billion in dividends and repurchased $31.8 billion in stock in those 5 years. Airbus paid $4 billion in dividends and $2.9 billion in share repurchases. That is the biggest difference in the two companies and the onenthat actually matters. Not the accounting differences.
 
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Polot
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 2:03 pm

Bricktop wrote:
marcelh wrote:
There is a lot of shooting the poster in this thread. I don't think it's about bashing Boeing, but to make clear what the (dis)advantages are for Boeing (and the shareholders) by using Program Accounting, instead of using the more applicable accounting rules. Reading all those posts which are pointing out that the poster is totally wrong and biased, it cannot be that difficult to answer this queston? And please, just in plain and simple English, I'm not a beancounter nor a financial Einstein.

Fair enough.

I can’t speak for others, but my criticism of the “controversy” over program accounting is SO WHAT?? It is all well disclosed as to how Boeing accounts for the 787 program. Now if they were hiding anything, I would be howling about that, but they aren’t. If anything there is additional transparency because the change quarter over quarter for the 787 line of business is broken out. I challenged him to short the stock if he has the SINCERE belief that Boeing is a house of cards.

As to shooting the poster, that only really comes from his motivations. If it was to have a legitimate discussion, well program accounting has been beaten to death on this forum, and he has had his say many times. My feeling seeing the title of the thread and his name attached to the original post was “Not this $#!t again” and that it was trolling.

That is why I and others says he has no point.

There is no legitimate end game to this discussion. Certain posters here will never be satisfied unless we all prescribe to their Chicken Little “the sky is falling” belief. Point out an inaccuracy in their statement and they will just focus on a minute error or just try to goad you into an argument (“are you chicken?”). Don’t agree with the severity of the issue? Obviously you are just a sleeping investor who thinks Boeing can do no wrong. All for what? Boeing’s financial position? If you don’t agree with it here is a novel idea- don’t invest in Boeing. Or short their stock a make a lot of money if you truely think they are in trouble. It’s odd to go so unhinged over something that is ultimately meaningless to the the lives of 99% of the people here.

Mjoelnr: I challenge you to go make a thread detailing the financial position, strength, impact, and cost of each individual aircraft program at Boeing and Airbus. That would be a legitimately useful thread and generate a lot of good discussion. It should be incredibly easy for you. If you are able to realize the impact of the 787 program despite Boeing apparently hiding and obscuring everything from everyone you should have no problem detailing the financial position of all other programs. Especially Airbus’s who doesn’t follow the shady US accounting rules.
Last edited by Polot on Fri Aug 03, 2018 2:04 pm, edited 1 time in total.
 
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Stitch
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 2:03 pm

If you want to understand why we go through this s**t every quarter, some Airbus Aficionados who have no clue about real-world accounting principles get upset when some Boeing Boosters who also have no clue about real-world accounting principles diss Airbus' quarterly financials in comparison to Boeing's quarterly financials. Said AA's then proceed to start their quarterly rant on why Program Accounting is a great evil that allows "Bankrupt Boeing" to keep operating when they would have surely been liquidated by their creditors under IFRS and therefore it is in fact Airbus that has the better financials.

It all boils down to "My OEM can (financially) beat up your OEM". :sarcastic:
 
mjoelnir
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 2:05 pm

Momo1435 wrote:
Talking about the SEC and program accounting Back in 2016 there was some news that the SEC were investigating the practice of using program accounting on the 747 and 787 programs. I tried to find some more recent about this, but it's all from 2017 when this news came out. Does anyone has any more info if the SEC actually started this investigation or even better, if they finished it?

This (possible) investigation shows that it is also nonsense that the way that the program accounting was used by Boeing is completely acceptable in the US. The scale of the deferred costs for the 787 is not something that can just be waved away, it's too big no matter how you do the accounting. But as we have seen in this thread the issue is clearly not big enough to bring the whole company into real serious trouble is going way too far.


One point if you read the old information for program accounting for cost, you have to go all the way back to the nineteen hundred eighties to find the material, is that you defer according to a plan. You defer expected costs. You should not use that systems to defer overruns and cost not connect to the smooth running of the program. You can also not defer cost on items not sold, or you do not expect to sell.
 
mjoelnir
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 2:12 pm

Stitch wrote:
If you want to understand why we go through this s**t every quarter, some Airbus Aficionados who have no clue about real-world accounting principles get upset when some Boeing Boosters who also have no clue about real-world accounting principles diss Airbus' quarterly financials in comparison to Boeing's quarterly financials. Said AA's then proceed to start their quarterly rant on why Program Accounting is a great evil that allows "Bankrupt Boeing" to keep operating when they would have surely been liquidated by their creditors under IFRS and therefore it is in fact Airbus that has the better financials.

It all boils down to "My OEM can (financially) beat up your OEM". :sarcastic:


You got me going by the endless babble about how profitable Boeing is compared to Airbus and how the 787 is a soaring success compared to the A380, while the A380 competes with the 747-8 and the 787 competes with the A330.

If you people do except that the 787 seriously compromised the profitability of Boeing and only program for cost accounting allowed Boeing to show reasonable profits the years since the 787 has been produced I will stay quiet.
 
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Polot
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 2:20 pm

mjoelnir wrote:
Stitch wrote:
If you want to understand why we go through this s**t every quarter, some Airbus Aficionados who have no clue about real-world accounting principles get upset when some Boeing Boosters who also have no clue about real-world accounting principles diss Airbus' quarterly financials in comparison to Boeing's quarterly financials. Said AA's then proceed to start their quarterly rant on why Program Accounting is a great evil that allows "Bankrupt Boeing" to keep operating when they would have surely been liquidated by their creditors under IFRS and therefore it is in fact Airbus that has the better financials.

It all boils down to "My OEM can (financially) beat up your OEM". :sarcastic:


You got me going by the endless babble about how profitable Boeing is compared to Airbus and how the 787 is a soaring success compared to the A380, while the A380 competes with the 747-8 and the 787 competes with the A330.

If you people do except that the 787 seriously compromised the profitability of Boeing and only program for cost accounting allowed Boeing to show reasonable profits the years since the 787 has been produced I will stay quiet.


You are aware that Boeing also reports their earnings based on unit-cost accounting, and what do you know they are pretty good!?

The writing off of costs would have caused reported profit pain ~8-10 years ago, not now. One really bad investment (the 787) is not going to sink Boeing for years to come, just as Airbus’s bad investments (the A380 and A400M, which together are probably close to the 787) have not destroyed them.
 
N212R
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 2:37 pm

bigjku wrote:
What you consistently refuse to acknowledge is that no one involved cares.


That part of the equation is easily enough understood. There is no sentiment in money. There is only the pathological impulsion to create the appearance of having it. The money "makers" exist in their closed-loop world of financial hot potato and pass the accounting buck. It's the world's biggest shell game and there is no limit to it's perpetual inventiveness.
 
bigjku
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 2:41 pm

N212R wrote:
bigjku wrote:
What you consistently refuse to acknowledge is that no one involved cares.


That part of the equation is easily enough understood. There is no sentiment in money. There is only the pathological impulsion to create the appearance of having it. The money "makers" exist in their closed-loop world of financial hot potato and pass the accounting buck. It's the world's biggest shell game and there is no limit to it's perpetual inventiveness.


That is an oversimplification of things. Some actors involved may not care. But not everyone involved is a Wall Street investment firm. Suppliers and customers take a different view of risk and still haven’t pulled back at all. This is in direct contrast to their behavior with BBD who was legitimately on the verge of bankruptcy. Suppliers demanded higher prices and more up front payments. Buyers weren’t willing to put much money down either.

It is easy for certain sets of people involved to act only for short term gain. It isn’t easy to get almost all players to do so.
 
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Stitch
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 2:56 pm

mjoelnir wrote:
If you people do except that the 787 seriously compromised the profitability of Boeing and only program for cost accounting allowed Boeing to show reasonable profits the years since the 787 has been produced I will stay quiet.


I've been posting Boeing's (IFRS-approved) Unit Cost Accounting numbers for years, and the numbers I posted have indeed shown that under UCA Boeing reported some huge quarterly losses in the mid-2010s (between $5 and 7 billion in the most extreme cases) as the 787 production ramp started and Boeing was stocking significant inventory as they tried to clear out the "Terrible Teens" and get the line running at planned rates.

Yet for 2016, Boeing would have reported $800 million more in revenue if they had used Unit Cost Accounting than they did under Program Accounting. They also would have reported more under UCA than PA for both quarters in 2018 to date. And they reported $4.7 billion in revenue in 2017 under UCA, which is only $800 million less than they did under PA (and the 787 production ramp and 787-10 likely accounts for that difference). I also recall Boeing's numbers in 2015 were similar or better under UCA than they were under PA.

So for the past couple of years at least, Boeing has not been reporting significantly (as in multiple billions) more earnings than they would if they were using IFRS-approved Unit Cost Accounting. If anything, they're reporting less revenue under Program Accounting, which tracks in line with the statements by those who had said that while PA helps boost profits in early years, it depresses them in later years.
Last edited by Stitch on Fri Aug 03, 2018 3:07 pm, edited 3 times in total.
 
N212R
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 2:57 pm

mjoelnir wrote:

So program for cost accounting has absolute nothing to do with normal capitalising. you will find no other example anywhere that allows you to capitalise plain production cost, at the point were the revenue for that item, that were produced with that cost, is realised.


But it must be true, he learned it as part of a MBA program in the USA! :roll:
 
kengo
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 3:29 pm

mjoelnir,

I've been following up this thread from the beginning not because what you are saying is right or wrong but because it is quite entertaining at the best. I am not trying to put you off in anyways but let me ask you a simple question.

Why do you care how Boeing accounts the 787 program? I know you are anti-Boeing but man I give you credit for ranting about how Boeing records 787 program every quarter when Boeing publishes their report when almost no one on this forum really gives a care. Can't you accept it is how it is done at Boeing and fully approved by the IRS and SEC? Like a few others here have said, if you think Boeing is cheating the investors with program accounting, you should take it up with IRS and SEC, and not on this forum. This is just a forum and nothing more. Your anti-Boeing is going a bit too far, IMHO. If Airbus was allowed to use the same program accounting, I doubt you would be making the same claims. Just give it up, man, it is getting a bit tiresome.
 
N212R
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 3:30 pm

2175301 wrote:
I would suggest that the lessons learned from initial production of a new product have value...


I once built a Rube Goldberg contraption from $100 worth of PVC piping and discarded metal. My world's best mouse trap ultimately turned out to be an exercise in futility. I learned that I had $100 less in pocket and nothing to account for my folly.

The next day I went to see my accountant, he assured me he could find "value" in my misguided ways....
 
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Stitch
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 3:58 pm

kengo wrote:
Like a few others here have said, if you think Boeing is cheating the investors with program accounting, you should take it up with IRS and SEC, and not on this forum.


They've already been sued by individual investors (who dropped the suit soon after filing) and investigated by the SEC (which failed to find cause to sanction the company).
 
bigjku
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 4:03 pm

Stitch wrote:
kengo wrote:
Like a few others here have said, if you think Boeing is cheating the investors with program accounting, you should take it up with IRS and SEC, and not on this forum.


They've already been sued by individual investors (who dropped the suit soon after filing) and investigated by the SEC (which failed to find cause to sanction the company).


The proper action would be to short the stock. The common thread with any accounting scam long term is they all fail if you aren’t making money. So if it’s a scam short the stock.
 
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 4:05 pm

kengo wrote:
mjoelnir,

I've been following up this thread from the beginning not because what you are saying is right or wrong but because it is quite entertaining at the best. I am not trying to put you off in anyways but let me ask you a simple question.

Why do you care how Boeing accounts the 787 program? I know you are anti-Boeing but man I give you credit for ranting about how Boeing records 787 program every quarter when Boeing publishes their report when almost no one on this forum really gives a care. Can't you accept it is how it is done at Boeing and fully approved by the IRS and SEC? Like a few others here have said, if you think Boeing is cheating the investors with program accounting, you should take it up with IRS and SEC, and not on this forum. This is just a forum and nothing more. Your anti-Boeing is going a bit too far, IMHO. If Airbus was allowed to use the same program accounting, I doubt you would be making the same claims. Just give it up, man, it is getting a bit tiresome.


Why do people care about that everything is fine with Boeing and that Boeing is perhaps not cheating but confusing the shareholders with their accounting practices? If one discusses something antagonistic there is always the other side. Why do they not accept that Boeing is much less profitable than shown?

Boeing went further than ever with deferring cost on the 787, far beyond the older programs, not only in sheer numbers, but went also right to or over the the limit with what cost they deferred. Perhaps the sudden write of off the two test frames was an Boeing answer regarding the worries of the SEC.

The IRS is hardly interested in Boeing showing less profits. The SEC is complicit in allowing such an outdated, absurd and grandfathered to a few firms accounting practice to continue. The SEC chickened out or was pressured when the USA was supposed to take up IFRS.

The USA guys were always so proud of their accounting standards as the worlds best, but by this time the USA is trailing other countries in the transparency and accuracy of their accounting standards.
 
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Revelation
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 4:57 pm

mjoelnir wrote:
Why do people care about that everything is fine with Boeing and that Boeing is perhaps not cheating but confusing the shareholders with their accounting practices? If one discusses something antagonistic there is always the other side. Why do they not accept that Boeing is much less profitable than shown?

Boeing went further than ever with deferring cost on the 787, far beyond the older programs, not only in sheer numbers, but went also right to or over the the limit with what cost they deferred. Perhaps the sudden write of off the two test frames was an Boeing answer regarding the worries of the SEC.

The IRS is hardly interested in Boeing showing less profits. The SEC is complicit in allowing such an outdated, absurd and grandfathered to a few firms accounting practice to continue. The SEC chickened out or was pressured when the USA was supposed to take up IFRS.

The USA guys were always so proud of their accounting standards as the worlds best, but by this time the USA is trailing other countries in the transparency and accuracy of their accounting standards.

In #273 you've admitted you're not posting here to gain knowledge or understanding, you're just here for revenge.

You've said you'll stop making a racket if someone will let you feel you've been able to avenge the various slights you claim people have made against Airbus.

Since you've not been given such relief, now you expand your quest for revenge to include conspiracy theories.

The unseen hand of the SEC and the IRS are helping Boeing smite the poor defenseless Airbus, eh?

In case you or anyone else still reading this thread are not aware of it, this is a textbook case of trolling.

Also, no one here really cares about your opinion of how the US accounting system is viewed internationally.

If you haven't noticed, this is airliners.net and not accounting.net.
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Wake now, discover that you are the song that the morning brings
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mjoelnir
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 6:10 pm

Revelation wrote:
mjoelnir wrote:
Why do people care about that everything is fine with Boeing and that Boeing is perhaps not cheating but confusing the shareholders with their accounting practices? If one discusses something antagonistic there is always the other side. Why do they not accept that Boeing is much less profitable than shown?

Boeing went further than ever with deferring cost on the 787, far beyond the older programs, not only in sheer numbers, but went also right to or over the the limit with what cost they deferred. Perhaps the sudden write of off the two test frames was an Boeing answer regarding the worries of the SEC.

The IRS is hardly interested in Boeing showing less profits. The SEC is complicit in allowing such an outdated, absurd and grandfathered to a few firms accounting practice to continue. The SEC chickened out or was pressured when the USA was supposed to take up IFRS.

The USA guys were always so proud of their accounting standards as the worlds best, but by this time the USA is trailing other countries in the transparency and accuracy of their accounting standards.

In #273 you've admitted you're not posting here to gain knowledge or understanding, you're just here for revenge.

You've said you'll stop making a racket if someone will let you feel you've been able to avenge the various slights you claim people have made against Airbus.

Since you've not been given such relief, now you expand your quest for revenge to include conspiracy theories.

The unseen hand of the SEC and the IRS are helping Boeing smite the poor defenseless Airbus, eh?

In case you or anyone else still reading this thread are not aware of it, this is a textbook case of trolling.

Also, no one here really cares about your opinion of how the US accounting system is viewed internationally.

If you haven't noticed, this is airliners.net and not accounting.net.


A lot of polemic to desperately avoid talking about facts.
 
PlanesNTrains
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 6:16 pm

mjoelnir wrote:
kengo wrote:
mjoelnir,

I've been following up this thread from the beginning not because what you are saying is right or wrong but because it is quite entertaining at the best. I am not trying to put you off in anyways but let me ask you a simple question.

Why do you care how Boeing accounts the 787 program? I know you are anti-Boeing but man I give you credit for ranting about how Boeing records 787 program every quarter when Boeing publishes their report when almost no one on this forum really gives a care. Can't you accept it is how it is done at Boeing and fully approved by the IRS and SEC? Like a few others here have said, if you think Boeing is cheating the investors with program accounting, you should take it up with IRS and SEC, and not on this forum. This is just a forum and nothing more. Your anti-Boeing is going a bit too far, IMHO. If Airbus was allowed to use the same program accounting, I doubt you would be making the same claims. Just give it up, man, it is getting a bit tiresome.


Why do people care about that everything is fine with Boeing and that Boeing is perhaps not cheating but confusing the shareholders with their accounting practices? If one discusses something antagonistic there is always the other side. Why do they not accept that Boeing is much less profitable than shown?

Boeing went further than ever with deferring cost on the 787, far beyond the older programs, not only in sheer numbers, but went also right to or over the the limit with what cost they deferred. Perhaps the sudden write of off the two test frames was an Boeing answer regarding the worries of the SEC.

The IRS is hardly interested in Boeing showing less profits. The SEC is complicit in allowing such an outdated, absurd and grandfathered to a few firms accounting practice to continue. The SEC chickened out or was pressured when the USA was supposed to take up IFRS.

The USA guys were always so proud of their accounting standards as the worlds best, but by this time the USA is trailing other countries in the transparency and accuracy of their accounting standards.


Called it. This isn’t about Boeing. This is about America. Boeing is just the topical tool.
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
marcelh
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 7:54 pm

Revelation wrote:
If you haven't noticed, this is airliners.net and not accounting.net.


Reading a lot of threads lately I sometimes think that renaming in "kindergarten.net" would be more appropiate. I consider most of the regular posters at this forum as well educated adults with a lot of knowlegde about the aviation industry, why not behave like that? As said before, I'm not a financial Einstein, but I'm interested in this matter. I'm baffled how people react, almost like they're having a double root canal treatment. Why all those reactions like it's a personal attack? I just don't understand it.
 
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Revelation
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 8:09 pm

marcelh wrote:
Reading a lot of threads lately I sometimes think that renaming in "kindergarten.net" would be more appropiate. I consider most of the regular posters at this forum as well educated adults with a lot of knowlegde about the aviation industry, why not behave like that? As said before, I'm not a financial Einstein, but I'm interested in this matter. I'm baffled how people react, almost like they're having a double root canal treatment. Why all those reactions like it's a personal attack? I just don't understand it.

I can't speak to the (unspecified) "lot of threads", but the person who started this particular thread now admits he is simply out to gain revenge for perceived earlier slights, and this isn't the first thread he's started on this topic, and earlier behavior suggests it's all for the same reason, he feels slighted.

Without such admission it's hard to understand the irrational behavior.

With it, it explains a lot of irrational behavior.

mjoelnir wrote:
A lot of polemic to desperately avoid talking about facts.

Why? You keep showing how you are impervious to facts.

We give you facts, you ignore them, because you're not out for facts, you're out for revenge.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
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mjoelnir
Topic Author
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 8:25 pm

Revelation wrote:
marcelh wrote:
Reading a lot of threads lately I sometimes think that renaming in "kindergarten.net" would be more appropiate. I consider most of the regular posters at this forum as well educated adults with a lot of knowlegde about the aviation industry, why not behave like that? As said before, I'm not a financial Einstein, but I'm interested in this matter. I'm baffled how people react, almost like they're having a double root canal treatment. Why all those reactions like it's a personal attack? I just don't understand it.

I can't speak to the (unspecified) "lot of threads", but the person who started this particular thread now admits he is simply out to gain revenge for perceived earlier slights, and this isn't the first thread he's started on this topic, and earlier behavior suggests it's all for the same reason, he feels slighted.

Without such admission it's hard to understand the irrational behavior.

With it, it explains a lot of irrational behavior.

mjoelnir wrote:
A lot of polemic to desperately avoid talking about facts.

Why? You keep showing how you are impervious to facts.

We give you facts, you ignore them, because you're not out for facts, you're out for revenge.

So what facts?

Are the shown profits of Boeing from the start of the production of the 787 inflated or not, by program for cost accounting?

Are the deferred losses stored as inventory a real inventory?

If you compare deferring cost with capitalising long use items, what is the long time worth of production losses?

Do you believe that a negative equity is the sign of a strong company?

Do you believe that an accounting system should be transparent and promote being able to compare the financial situation of different companies?

Let us see you answering with some arguments instead of the polemic you are so good in.
 
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Stitch
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 8:38 pm

mjoelnir wrote:
Are the shown profits of Boeing from the start of the production of the 787 inflated or not, by program for cost accounting?


Yes. And most, if not all people who have involved themselves in this...discussion...have stated as such.


mjoelnir wrote:
Are the deferred losses stored as inventory a real inventory?


A significant portion of them (somewhere between 35-50% based on reports) are indeed that - inventory in progress for undelivered (but completed) frames, frames in production on the PAE and CHS FALs, components for frames stored at PAE and CHS waiting to be sequenced into the FALs and inventory on site at suppliers that Boeing has already paid for.



mjoelnir wrote:
Do you believe that a negative equity is the sign of a strong company?


Yes, if said company's credit rating is strong as is its cash flow and said company's creditors are taking no actions towards "winding up" or liquidating the company to recover their outstanding debts.


mjoelnir wrote:
Do you believe that an accounting system should be transparent and promote being able to compare the financial situation of different companies?


Yes.

And for Q2 2018, using Unit Cost Accounting rules for both OEMs, Boeing Commercial had earnings from operations of USD 1.80 billion compared to USD 1.35 billion for Airbus (1.148 billion euros).
 
SFOtoORD
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 9:07 pm

marcelh wrote:
Revelation wrote:
If you haven't noticed, this is airliners.net and not accounting.net.


Reading a lot of threads lately I sometimes think that renaming in "kindergarten.net" would be more appropiate. I consider most of the regular posters at this forum as well educated adults with a lot of knowlegde about the aviation industry, why not behave like that? As said before, I'm not a financial Einstein, but I'm interested in this matter. I'm baffled how people react, almost like they're having a double root canal treatment. Why all those reactions like it's a personal attack? I just don't understand it.


It would be an interesting thread if it wasn’t a repeated rehash of an old topic that one poster used to drive a weird anti-American sentiment. If instead the thread was about how the accounting treatment works, advantages/disadvantages, how it drives decision making then it would be an interesting thread. But the main poster is mostly a troll and this no intelligent discussion ensues.
 
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 9:15 pm

Stitch wrote:


mjoelnir wrote:
Are the deferred losses stored as inventory a real inventory?


A significant portion of them (somewhere between 35-50% based on reports) are indeed that - inventory in progress for undelivered (but completed) frames, frames in production on the PAE and CHS FALs, components for frames stored at PAE and CHS waiting to be sequenced into the FALs and inventory on site at suppliers that Boeing has already paid for.





Those items inventory in progress for undelivered (but completed) frames, frames in production on the PAE and CHS FALs, components for frames stored at PAE and CHS waiting to be sequenced into the FALs and inventory on site at suppliers that Boeing has already paid for are the normal items in the inventory. The normal items in the inventory are items of a definite worth, that has still to be realised.

I talked about if the deferred cost only. They are 24 billions USD of the 61 billion USD inventory. Do you count them as a real inventory that has worth still to be realised?
 
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Stitch
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 10:06 pm

mjoelnir wrote:
I talked about if the deferred cost only. They are 24 billions USD of the 61 billion USD inventory. Do you count them as a real inventory that has worth still to be realised?


I would be inclined to say "no" since the airframes have been delivered to customers, so the frames are no longer in inventory. And the revenue from the sale has been collected, though they do have "worth to be realized" in the form of future ancillary and support sales (though I do not believe that revenue is applicable in this case).

But I do not consider that my one quarter of third-year Accounting at University because a girl I liked was in the class makes me any kind of authority in corporate accounting even if I did get an "A" in the class, so my views may very well be wrong and it is indeed counted as real inventory with a worth still to be realized.


And as much shade as has been thrown at GAAP in comparison to IFRS by a few folks on this thread, since 2002 the two bodies that control GAAP and IFRS, respectively, have been working to harmonize their standards and since 2007, the SEC recognizes the authenticity and accuracy of financial reports complied under IFRS from non-U.S. companies registered in America and no longer requires them to reconcile their financial reports to GAAP standards.
 
smartplane
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Re: Reduction of 787 deferred production cost slows.

Fri Aug 03, 2018 11:11 pm

Stitch wrote:
And as much shade as has been thrown at GAAP in comparison to IFRS by a few folks on this thread, since 2002 the two bodies that control GAAP and IFRS, respectively, have been working to harmonize their standards and since 2007, the SEC recognizes the authenticity and accuracy of financial reports complied under IFRS from non-U.S. companies registered in America and no longer requires them to reconcile their financial reports to GAAP standards.

I'm back.

Boeing relies on financial grandfathering concessions to perpetuate it's current method of accounting. Grandfathering is coming under increasing pressure, not only in respect to financial, but also airworthiness standards.

IRS and SEC are respective members of IOSCO and IFA, which have made their positions clear.

Dialogue with Boeing is ongoing, though all three are keeping mum, and meeting at neutral locations. Dual accounting presentations are a concession meantime, to delay in my opinion, the inevitable.

In reality, other than time value impact, which is an issue for the IRS, on a going concern basis, it all pretty much evens out over time, give or take a few hundred million.

In the event of a sale, partial sale, failure, or any other event that crystallised values, there is a massive difference.

So both sides are right and wrong.
 
osiris30
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Re: Reduction of 787 deferred production cost slows.

Sat Aug 04, 2018 2:22 am

mjoelnir wrote:
Polot wrote:
mjoelnir wrote:

Okay I made a mistake, you called me out. Half of the retained earnings earnings of Boeing are canceled out by the deferred cost not out off all profits ever made.

That does not change a dota about what I talk about.

Let us start with negative equity and deferred cost, a minus of 26 billion USD more liabilities at Boeing than Boeing has real assets.
52 billion retained earnings shown and reality they are 28 billion USD. 12 billion USD when you minus the accumulated or other comprehensive losses.
61 billion USD inventories shown, 24 billion of them are deferred cost so real inventory is 37 billion.
The retained earnings are always inflated until the deferred cost are booked out.

Could you tell me how that is not a shell game, legal in the USA, but would be frowned upon everywhere else.

What would you call an accounting system that allows a company to show double the profit it really has. That allows to show inventories that are not there.

If you would have read the article I provided by the CAPjournal, you would have realized that Boeing has shown a higher profitability than Airbus since the 787 is manufactured up to today, while having in reality a lower profitability. All due to moving the profit or earnings thanks to program for cost accounting. What does that do to the comparability of company accounts between different companies in the same industry?

Could you answer to this points or are you chicken?

You don’t seem to understand that if Boeing was writing off these costs or if anyone was actually concerned Boeing would have made different decisions on how they used their money over the past 10 or so years (ie less dividends and stock buy backs).


So you are to chicken to answer to any points, just a bla bla bla about Boeing knows best. Boeing does not write off this costs because declaring a heavy loss would wake up sleeping investors. It is so much nicer to declare profits, if an obscure accounting method allows you to hide the losses.


He's not chicken. He, just like the rest of us are sick of you running your mouth or fingers on a subject that has been put to bed loooong ago. If you think it is a problem talk to the SEC. If they are fine with it, it is legal. You can make up whatever story suits you from there.
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
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Re: Reduction of 787 deferred production cost slows.

Sat Aug 04, 2018 7:54 am

This topic has again been widely discussed and will be locked now. In case there will be any remarkable news about this topic, feel free to open a new thread.

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