By way of introduction, I have a degree from MIT. The Diploma shays "unspecified". MIT probably did not want to grant degrees in "Weapon System Engineering". Thus my chosen identity. Most classes were in the Instrumentation lab run at the time by Charles Stark Draper. On the bulletin board was nailed a can of Whittamore Shoe Polish with the label "Our Product". You could still read Whittamore on the side of the building. This should be enough for those that know MIT.
I have a question for this distinguished group:
The balance sheet shows a line as an asset:
Deferred Long Term Asset Charges $281,757,000
What the heck is this? I only took accounting. Not "Creative Accounting".
I have been accumulating puts for some time. Most of them are at 25 recently acqired so you know how I am betting. Mostly I am pretty conservative and write calls against utility stocks. You all know what a thin gain that is. But I have increased my holdings every year for the past 20 or so years.
These are expenses which the company has paid for but not yet subtracted from the assets.а They are very similar to Prepaid Expenses (where rent would be counted as an asset until it came due each month, then would be subtracted from the balance sheet).а In fact, Prepaid Expenses are type of deferred charge.а The difference is, when companies prepay rent or some other expense, they have a legal right to collect the service.а Deferred Long Term Asset Charges have no legal rights attached to them.
For example, if a company prepaid rent on a storage building, and then spent $30,000 moving all of their equipment into it, they could set the $30,000 up on the balance sheet as a deferred charge.а This way, they wouldn't be forced to take a hit by reducing their earnings $30,000 the same month they paid for the relocation costs.а They could then write this amount down over time.
These charges are intangible and should be given very little weight when analyzing a balance sheet."