It’s working

NRG Energy, a wholesale power generation company reported a sharp rise in first-quarter profit. Why? FAS 157.

Their tripling of net income was due to $271 million in unrealized mark-to-market gains for the first-quarter compared with $160 million in unrealized mark-to-market losses in the comparable quarter last year. Let’s do the math. A $431 million swing. Because of a change in accounting rules.

But the real good news? Income rose to $0.70 per weighted average common share, from $ $0.12 in the year-ago quarter.
The corporation wins. Employees have greater confidence that their jobs are secure. Investors are pleased. And Wall Street smiles. Everyone is happy.

Not through any largess from the FASB. Rather because a wrong was righted. NRG was able to value their long-term assets at a fair price instead of forcing them to pretend that their value is only what they could maybe sell them for today… in a down or nonexistent market.

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