GM turns $323 million loss into $445 million profit with accounting change
Life would be great if we could pull the same tricks with our finances that GM has pulled off with theirs. Earlier this month the ailing Detroit giant reported a loss of $323 million, a substantial loss, but still a significant improvement over the same quarter the previous year. They significantly changed their financial fortunes yesterday, though, by announcing that they have retracted that loss and instead posted a $445 million profit.
The extra $778 million didn’t appear as the result of a sudden rush of sales or anything like that. Instead, it came about because SEC regulators, after conversations with GM, have allowed a different interpretation of the settlement they had to make with retired workers over health care costs. The SEC had previously required GM to report the cost entirely in the first quarter. That never made a lot of sense, and it has been remedied. Instead, the charge will be spread out over 7 years, starting in the third quarter of this year, which is when the settlement will come into effect.