Report: Accounting change could net Ford $13-billion profit
Ford is looking to make an accounting change this year that would eliminate a valuation allowance from its books and net the company $10 to $13 billion in profits. The move shows that Ford is confident that it sustain its new-found profitability, after four straight years of operating losses from 2005 to 2009.
The valuation is held against deferred tax assets, which the company needed as it saw profits disappear. With the company making $9.3 billion in profits over the last two years, the valuation isn't necessary any more.
When the move is made, Ford said it will record it as a "special item for the quarter," to avoid a negative tax effect. Even after Ford gets the valuation allowance off its books, the company may still be able to operate tax-free until the end of the decade, as it is still eligible for tax breaks after $31.4 billion in losses from 2005-2009.
[Source: The Detroit News | Image: John Neff/AOL]
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