Hey financial guys please explain this to me

bpost

I was reading the article of the end of the 747 use by US carriers. This is part of the article.

In late July of last year, Boeing lowered the number of 747s in its program accounting block from 1,574 planes to 1,555 and took a pretax charge of $1.2 billion against the program. In a filing with the U.S. Securities and Exchange Commission the company added:

If the 1,574 planes are sold and not owned by Boeing what is a pretax charge of 1.2 billion against the program for?

Why would the planes be on the program accounting block?

Please explain this.

BoltactionMan

It is probably a charge to some predicted earnings. The output, (sale) is reduced so there is some anticipated earnings predicted in filings. Now that money won't be realized so they have to account for the predicted loss.

KC

brewer12345

Accounting for long term projects is complex. I would guess that Boeing had capitalized some expenses related to the 747 a long time ago and has been amortizing them ever since. With recognition that the 747 is going away, those capitalized costs would have to be written off.

chiefr

Pretax charges have many different meanings.

I believe what they are talking about the deductions they take from operating expenses, interests, and depreciation from their investment in materials, and equipment used to build the 747. Some of such deductions are called write offs or tax breaks by liberal DEMOCRATS. This is usually done after all income generated from the sales and other revenue is collected. Taxes due are then paid.

I can't begin to imagine the extreme number of accountant, consultants, and lawyers a multinational company like Boeing must employ merely to satisfy government.

select-fire

19 planes could have been canceled from build.

mogley98

Maybe they lost 19 planes in the lake and had to write it off of the balance sheet [:0][:0][:0][}:)][:D]quote:Originally posted by select-fire
19 planes could have been canceled from build.