Regulations and accounting standards require companies to declare risks as part of their annual reports but many of them are not risks at all, they are business as usual. Take for instance competition. All companies without exception have competitors and all companies consider the competition as a major risk. From the risk statements of the…
Companies on both side of the Atlantic are required to describe the material risks threatening their business. The stated objective is to help potential investors decide whether to invest in the company and to help actual shareholders to assess the risk of their investment. American companies list their risks in their annual report, Form 10K…
Having announced in their accounting policies that research and development expenses are expensed as incurred, pharmaceutical companies [1] then show capitalised research and development costs in their balance sheet. But they hide them away and make them difficult to find. Glaxo Smithkline for instance hide them under the heading “Licensed patents amortised brands etc” which…
Development expenses under IFRS rules must be CAPITALISED. Development expenses in USA under FASB standards must be EXPENSED. Yet ironically pharmaceutical companies treat development expenses in the same way. I examined the financial statements of four large pharmaceutical companies in USA and four in Europe and compared their treatment of development expenses. [1] US companies…