accounting paper

accounting paper - tax asset in its balance sheet which...

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GM recent annual loss is due mainly to unused tax losses. The world’s largest automaker recorded $39 billion in the third quarter alone of 2007 in unused tax credits. This is not the first time GM had experienced such losses however. In 1992, the lost a mere $23 billion due to a change in health care accounting. The company is not expected to earn profits due to these credits until 2010 at the earliest. In hopes to solve the problem, the company offered buyouts to all 74,000 U.S. hourly workers, in hopes to replace them with lower-paid employees. If a company has unused tax losses carried forward from previous years, some of the companies tend not to recognize the deferred
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Unformatted text preview: tax asset in its balance sheet which leads to the tremendous losses. According to the Associated Press, these losses were due to a number of accounting errors however, GM chief executive Rick Wagoner states, “I think you'd have to have a Ph.D. in accounting to understand it." Because of accounting rules, the company was forced to take the non-cash charge because of their 3 rd quarter losses. These losses are an important lesson for any accountant because it shows that even the smallest error on the balance sheet or anywhere in the accounting process can have major consequences. ( http://www.msnbc.msn.com/id/23124844/page/2/ )...
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This note was uploaded on 04/07/2008 for the course EB 101 taught by Professor Odell during the Spring '08 term at Westmont.

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