Analyzing Business Earnings 99to receive separate disclosure. Delta Air Lines, annual report, June 2000, 36. Delta
does disclose balances for deferred gains on sale and leaseback transactions. These
balances declined by $50 million in 2000, suggesting that gains equal to this amount
were included in earnings for 2000. They are treated as a reduction in lease expense
and do not appear on a line item as gains on the disposition of f light equipment.
- In fact, 1996 saw a loss of $7.4 million, followed by gains of$34.1 in 1997 and
$2.6 million in 1998. Goodyear Tire and Rubber Company, annual report on Form
10-K to the Securities and Exchange Commission, December 1998, 32. - George A. Hormel & Company, annual report, 1993, 58.
- H. Choi, Analysis and Valuation Implications of Persistence and Cash-
Content Dimensions of Earnings Components Based on Extent of Analyst Following,
unpublished PhD thesis, Georgia Institute of Technology, October 1994, 80. - Ibid. The authors of this chapter served as committee member and commit-
tee chair for Dr. Choi’s thesis guidance committee. - AICPA, Accounting Trends and Techniques(New York: AICPA, 2000), 311.
- AICPA’s Special Committee on Financial Reporting, Improving Business Re-
por ting—A Customer Focus(New York: AICPA, November 1993), 4 - SFAS 131, Disclosures about Segments of an Enterprise and Related Infor-
mation(Nor walk, CT: Financial Accounting Standards Board, June 1997), para. 10. - APB Opinion No. 30, Repor ting the Results of Operations(New York: AICPA,
July 1973), para. 20. - SFAS 4, Repor ting Gains and Losses from the Extinguishment of Debt(Stam-
ford, CT: FASB, March 1975). - SFAS 15, Accounting by Debtors and Creditors for Troubled Debt Restruc-
turings(Stamford, CT: FASB, June 1977). - Exxon’s accident took the form of a massive oil spill in Alaska, and Union
Carbide’s was a release of toxic fumes in India. - Armco Inc. annual report, December 1998. Information obtained from Dis-
closure Inc., Compact D/SEC: Corporate Information on Public Companies Filing
with the SEC (Bethesda, MD: Disclosure Inc., June 2000). - Securities and Exchange Commission, Staff Accounting Bulletin No. 101
(Washington, DC: SEC, 1999). - Southwest Airlines Inc., annual report, December 1999.
- This statement needs some expansion. With the exception of barter transac-
tions, almost all expenses involve a cash outf low at some point in time. In the case of
depreciation, the cash outf low normally takes place when the depreciable assets are
acquired. At that time, the cash outf low is classified as an investing cash outf low in
the statement of cash f lows. If the depreciation were not added back to net income in
computing operating cash f low, then cash would appear to be reduced twice—once
when the assets were purchased and a second time when depreciation is recorded,
and with it net income is reduced. - To keep the books in balance, the recognition of the loss in the income statement
is matched by a reduction in the carrying value of the investment in the balance sheet. - SEC Reg. S-X, Rule 5-02.6 (Washington, DC: SEC, 2001).
- SEC, Staff Accounting Bulletin No. 40(Washington, DC: SEC, February 8,
1981).