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Obscure rule affects Disney finances (free registration required)

Obscure rule affects Disney finances (free registration required)

by Rick Turoczy on December 12, 2004

In the world of corporate finance, Sarbanes-Oxley has been described as the accountants’ relief act of 2002. But there is another, less well-known rule change adding to the work of accountants and chief financial officers in the wake of the Enron accounting scandal. It’s called Fin 46, or Fin 46R in the revised version of the January 2003 rule.

Fin 46R is a rule developed by the Financial Accounting Standards Board, the industry body that tells U.S. corporations how they must record revenue, profit and the other details that go into quarterly and annual reports to the Securities and Exchange Commission.

The board, known as FASB, has instructed companies to take a harder look at what entities they fully disclose on their books. The new rule states that, even if a company is not the majority owner of a business or unit but absorbs a majority of losses or returns or has “the ability to make economic decisions” about the entity, it should consolidate it on its books.

Obscure rule affects Disney finances (free registration required)

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