[geeks] Learning Accounting (was: a warning to the self assured)

[Mike Hebel]

MB> Or you could try a more recent textbook:

MB> ####
MB> Scenario 8.4:

MB> You have 2 cows. You sell 3 of them to your publicly listed company
MB> using letters of credit opened by your brother-in-law at the bank.

MB> Then you execute a debt-equity swap with an associated general offer, so
MB> you get all 4 cows back with a tax exemption for the 5th cow, of course.

MB> The estimated future value of the milk cash flow stream rights of the 6
MB> cows are monetized and transferred by an intermediary to the Cayman
MB> Islands, secretly owned my a majority shareholder who sells the rights
MB> to all 7 cows back to your listed company, off-balance-sheet, of course.

MB> The annual report says the company owns 8 cows and recognizes milk
MB> revenue for its 20-year life of the cow.

MB> This is hedged with a derivative cow life insurance policy through a
MB> Cayman Island bank, and these hedges are done through the company's
MB> commodity storefront with an option to buy one more cow, no balance
MB> sheet provided.

MB> The company says it will file footnotes at a later date...

MB> ####

AUUGH!  My bwain hurtz!  What have you done to my bwain!

I _hated_ story problems in school.  I don't think I've ever met a
story problem I've ever liked - period.

I'm thinking Amy's suggestion of a 60's accounting book is a good one.

Mike Hebel                        mailto:nimitz at owc.net