New, Not Necessarily Improved

BY ARMAN SATCHYAN

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After reading the article “Shaking Up Financial Statement Presentation” (Nov. 08, page 56) and reviewing Exhibit 2, I am baffled as to how the new approach of netting assets and liabilities and separating the balance sheet into operating, investing and financing sections similar to the statement of cash flows is an improvement to the traditional A=L+OE method of balance sheet presentation. I am not sure what added value the user of such a statement will receive from netting assets and liabilities. The new presentation method seems to add confusion instead. The elementary task of checking total assets against total liabilities plus total equity seems to become a laborious process under the proposed model.

I do find added value in the separated operating, investing and financing categories, however. Yet, I propose that these figures be presented as footnotes to the financial statements and not incorporated into the balance sheet.

Arman Satchyan
Tujunga, Calif.

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