Doing Less is Doing More
A concept I have been toying with lately is abstraction. That is the less I do, the further I go. A world where doing less is doing more. In computer science, abstraction refers to removing the specific details and implementation, but keeping the general form and high-level concepts. Now, we might wonder how this is possible. And, it comes down
Why Pay So Little in Effective Taxes?
What causes companies to pay less in effective taxes than the statutory tax rate? If the US tax rate is 21%, why do some companies report paying less than that? Considerably so. Well, the difference arises from permanent book-tax differences. That is transactions that permanently result in the book taxes differing from how much is paid in cash taxes. Firms
The History of Goodwill
The way that accountants have recorded goodwill across the statements has varied. In 1970, the APB required firms to amortize goodwill for no longer than 40 years. Goodwill at that time was seen as a “wasting asset.” That is one with a definite life that loses value over time. This means that goodwill increased the amortization expense on the income
It’s Hard Understanding Ourselves
One of the hardest yet most powerful things we can do is understand ourselves. I find it pretty challenging to know what it is that I really want. Me. And me alone. And, the reality is that everyone is just figuring it out. Our interests are changing. Our experiences are growing. Our worldview is expanding. This means we are not
How Do Firms Quantify Goodwill?
First, what really is goodwill? If I say that I have built up lots of goodwill with my friends, that suggests that I have built a decent reputation with them. Maybe this could be in the form of favors. I may have done a lot of favors for free. This builds goodwill.I may have covered their backs when they were
How Do Companies Reflect Changes in Goodwill?
How do companies assess the value of goodwill on the balance sheet? Companies do not amortize goodwill as an expense. Why? Because goodwill in a sense is indefinite. Meaning that it does not have a specified life. When we think about other intangible assets such as patents or customers, there is an average expected life span associated with them. Patents
To Be Well-rounded or Unidimensional?
To be well-rounded or unidimensional? This is a question I am trying to answer. Over the past few years, I have heard conflicting opinions. Be well-rounded. Go to a good college. Get a good white-collar job. Have a nice family. Be faithful. Be fit. Be funny. Etc. Be really good at one thing. Prioritize your career at all costs. I
Question of the Day 4/27
Question In January, DropoutEdu sold and delivered $100 worth of textbooks to customers. But, the customers only need to pay cash for the purchase in February. Assuming a 25% tax rate, how much would DropoutEdu report in earnings in January? Answer Answer: 75 Cash is irrelevant to income statement earnings. First, the goods were transferred in January, so it aligns
Minute Markets 4/26/24
Key Events 👉 Google beats earnings, announces first-ever dividend Google’s shares soared 11.4% post-market on Thursday after beating earnings expectations in sales, profit, and advertising revenue. The strong performance was driven by accelerated growth across three major sectors: AI-enabled search, Youtube advertising, and cloud computing. Google also introduced a quarterly dividend of 20 cents a share. Why is this important?
My Problem Isn’t About Getting Started.
The simple answer is just start. The better answer is reduce friction. There are a lot of things we want to start. Going to the gym routinely.Reading daily.Building a business.Etc. The common advice I got was just get started. Action at the start is more meaningful than information. We have all the information we need to take the first step.
