Can My Accounting Work Like the Banks?
April 2, 2009 by Miranda Marquit
Filed under Finance
Today’s Big Fun News is all about new accounting rules for banks. Now, we’ve known for years that in personal finance, our situation would be a mess if we used the same 
rules that the government and corporate America use. However, I do kind of like the idea of having my personal accounting work based on the new rules offered to the banks. All I have to do is say I’m worth as much as I want — as long as I come up with a valuation formula to back me up.
Today the Financial Accounting Standards Board here in the U.S. announced that it is changing some rules that govern how banks determine the value of their assets:
- Banks can use their own valuation methods — rather than relying on market value — to determine the worth of their illiquid assets.
- Banks do not have to “count” the entire amount of profit impairments.
These rules basically allow banks to decide what their toxic assets are worth (helping their balance sheets), and it allows them to decide to discount items that might affect profits. Banks can tell investors how much they are worth, and it works — according to these new accounting rules.
If only I could do the same thing: I’m worth $100 million.
image source: Arpingstone via Wikimedia Commons
