My favorite of the Detroit Big Three, Ford, has announced that as a result of some changes around the company they may make quite a lot of money.
The Blue Oval isn’t going to make much differences as far as the production, distribution and pricing but the difference is still amazing.
Ford is going to make an accounting change this year that would eliminate a valuation allowance from its books.
I went to a school where they thought you stuff like this, it was called college and if I were one of the people paying attention I’d be excited for Ford when hearing this.
If however, like me, you’re not one of Ford’s accountants you’d also get excited in finding out that because of this change the company stands to make profits ranging from $10 to $13 billion.
So why not do this earlier you may wonder. It’s because Ford used this valuation because they needed it for deferred tax assets.
You can see that as a tax break which is no longer needed since Ford has been making a profit for the past two years despite some of the worst times around for car makers.
Somehow, because of the years of losses registered by Ford several years ago, the Blue Oval will get the chance to operate tax-free for several years to follow.
Perhaps this way Ford gets to catch up with the Toyota finances.
