Moving Away From The Past

The past is far from the ideal place to set up residence, but I’ve been living in it for quite a while now. The past is a familiar neighborhood, and I am afraid it might be hard to leave, but leave it I must if I want to start actually living before an alarming death rattle comes up through my chest and I realize it’s a bit late. It has been rather nice here, in a morose sort of way. I have a comfy chair, a blanket and matching pillows, and a remote control. I can sip hot tea or drink a generous glass of red wine and ignore my present reality while I close my eyes and wallow in the emotion of my choice. Generally, I’ve chosen regret as the umbrella emotion, but that holds with it other r-words, such as resentment, rage, and remorse. A few dramas drove me here; although thankfully I’ve functioned well enough to hold a paying job, this ongoing comfy chair pity party has been recurring for a very long time!

From this day forth, I want to look at the past in a new light. Oh, it’ll still be there, because there’s no way I can really make what has happened not happen. I’ll just look at it differently. Maybe I’ll still even use the comfy chair from time to time, but I won’t live there. Instead of using the past as an excuse to eat ice cream and ignore reality, I’ll use it as a compilation of lessons from which I can pick and choose. As I sift through river of my memories, I can pan for gold, and I’m bound to find it there. I’ve already done some introspection about the matter, and here’s what I’ve come up with so far:

The Past Is:

1) A Hodge-Podge of Disputable Interpretations that Can and Should be Questioned

Ha! I bet you thought I’d say that the past is a teacher! It is, kind of, and I’ve snuck this concept in as my second point. First, however, I must point out that if you ask two members of the same family who’ve witnessed an event together about the details of that event, and you’ll very likely get two different stories. You can get variations of stories from your own mind, too! In this regard, the past is a changeable and moody beast. Remember, people filter what happens through whatever lens they are might be looking through at the time. These filters are developed through culture, family, education, friends, books, television shows, music, and any number of factors. An event occurs, and then the way you interpret it depends on whatever screen you’re looking through at the moment. Age takes part in the matter, as well. What a five year old sees varies widely from what a teenager or a middle aged person sees. When you go back to the past, you don’t take the same filter with you that you had before. So how do you even understand what happened? And does it really matter, since the past, by definition, is officially over?

2) A Potentially Insightful Guide

I’d say the past is a teacher, but that isn’t exactly true. The past is not going to look at me with bespectacled eyes and kindly bestow wisdom upon me. It will, however, offer up experiences from which I can derive my own lesson plan. I can interpret negative experiences, start to see patterns, and come up with strategies for change, if change is possible. If change is not possible, then I’ll say the serenity prayer and accept the situation, instead. Either way, I’ll move on after having learned something.

I can also gather up positive experiences, and look for ways to continue those. I point this out because of my tendency to look at the past through the lens of a person who has been repeatedly beaten over the head with a very large stick for so long that she cannot remember what it’s like not to be beaten over the head with a very large stick. As a recovering pessimist, however, I must publicly admit that good stuff happens occasionally, as well, and these types of experiences should be gathered up and placed into a pretty basket, to be on display in the forefront of my mind – on the mantel of my mental fireplace, if you will.

3) A Potentially Dangerous Place

The past can be a siren call to a distant land of lamentations, too much wine, and an abused present moment that gets trampled over by the pursuit of what has already happened. It is tempting to regress back into a self-righteous, melancholic rage, for instance, when one is conjuring up what a significant other did five years ago. But isn’t that a waste of time? As Anne Lamott has so artistically illustrated, “My mind is a neighborhood I try not to go into alone.” This is especially true when we let our thoughts linger in places where we have absolutely no control. What happened five years ago or even five minutes ago is indisputably unchangeable, and if we choose to dwell there, the present moment will slip by without being savored or utilized. If we live this way, we are choosing to be in a terrifying, crime-ridden landscape. We’re hopping about imaginary police-taped outlines of bodies on the pavement and crying over the cadavers!

In sum, the past is a potential place to mine for gold, and it is also a potential minefield. Approach it carefully. Salvage bits and pieces. You will find a bountiful assortment of good and bad. You will find memories that will make you fall to your knees in gratitude, and memories that will overcome you with sorrow. By all means, go there. Just don’t do what I did and take up residence. Although it may feel comfortable, it’s a trick. I lured myself into believing my life was over, and years went by before I woke up and realized I was wrong. Fortunately, although I am moving away from the past, I don’t have to put up any for-sale signs. I can keep my same house, my same stuff, and my same surroundings. I won’t have to pack up any boxes, and no moving van will be required. Although I have been living in the past, the present has always been here, patiently waiting for me to see it. I can still stay in this comfy chair, even, if only for a minute longer, but instead of mourning the past, I can rejoice in the now. It is delicious here. Join me!

Accounting Education in Films

Because of major financial crises that have occurred in the past, many film producers choose to re-enact these events through movie productions. These producers were forced to incorporate technical accounting and financial principles to correctly portray the events leading to a financial crisis. “Other People’s Money,” a film released in 1991, by Norman Jewison, starred Danny Devito as Lawrence Garfield. Garfield’s success has come as a result of purchasing companies and liquidating their assets, which required accounting and financial theories. The accounting that is discussed during the movie directly relates to course material commonly studied in an intermediate level accounting class.

Garfield identifies an appealing company called New England Wire and Cable. He is aware that the company has a higher liquation value per share than market price per share. In addition, he is particularlyimpressed by this company because it has no debts, no legal liabilities, no environmental or contingent liabilities, and a fully funded pension. Garfield makes every effort to influence the owner to sell the company and illustrates to him how his assets are worth more after liquidation.

This movie incorporates many theories and topics presented at an intermediate accounting level. Topics such as Generally Accepted Accounting Principles (GAAP), liquidation, market value, historical costing, financial statements, and fair market value are frequently mentioned throughout the plot. A particular scene in the movie displays Lawrence Garfield explaining a very basic valuation analysis to the owner of New England Wire and Cable that simplifies the concept of “market value or price per share.” This calculation includes the addition of equipment at salvage value, land at fair market value, value of other operations, and working capital, totaled and divided by the number of shares issued and outstanding.

The equation is begun by explaining that equipment, purchased at 120 million dollars, has a salvage value of 30 million dollars. The concept of depreciation, which includes salvage value, or value of an asset at the end of its useful life, is an intermediate level accounting topic that is frequently referenced. Garfield continues by adding the fair market value of the land, as grazing land. When learning fair market value (FMV) in accounting education, it is commonly associated with impairments, a topic learned in intermediate accounting. New England Wire and Cable also conducts operations of plumbing electrical and adhesive, with added other revenues to Garfield’s calculation. Finally, working capital is added to this part of the equation. Working capital, particularly as a ratio, is constantly used in accounting and finance to show liquidity of a business by comparing current assets to current liabilities. In intermediate accounting courses, current liabilities are further discussed relating to gain and loss contingences.

To begin the second part of the calculation, Garfield decided to reduce the total by 25 million dollars because the wire and cable division of the company is not producing a profit and is being supported by the other divisions. He does this to be conservative. Conservatism has remained a large part of intermediate level accounting, specifically in acquisition and valuation of plant, property, and equipment. Following this new conservative total, Garfield calculates the value per share of 25 dollars by dividing by the number of shares issued and outstanding. The current owner of New England Wire and Cable mentioned that the initial market price was 10 dollars per share and Garfield refers to this as a “sale” since its liquidation value per share is 25 dollars.

The market price per share of stock is a current measure, not based on historical values. All of the variables needed to calculate the market price per share is given within a company’s financial statements. The difference been these two values is that the initial market value is what the stock is actually selling for per share while the liquidation value is what each share would be sold for if the company should go out of business and sell all assets. Typically, the market price per share should be higher than liquidation value. In addition to the actual calculation of a valuation analysis, students of intermediate accounting are continually educated on the preparation of financial statements, in compliance with the Generally Accepted Accounting Principles, otherwise known as GAAP.

In this short equation, each component included a number of accounting concepts that are discussed in intermediate level accounting. Each line item of the equation could be broken down into accounting ideas that directly relate to many other theories. As students are educated in the field of accounting, it is easily determined that each theory and concept is a building block for a more complicated and complex accounting problem.