Ford Accounting Move Could Add $13 Billion to Profit

Ford Motor Company may make an accounting shift that could give the automaker a big chunk of change. According to industry insiders the move may take place within the next few days.

Business Week, Friday March 4th, 2011

Ford in the second half may eliminate from its balance sheet a valuation allowance held against deferred tax assets, it said in a federal filing this week. The reserve was created in 2006 as Ford began four years of operating losses. Eliminating the allowance may add $10 billion to $13 billion to Ford’s net income this year, said Robert Willens, president of Robert Willens LLC of New York, a corporate tax specialist.

“This is a very positive statement from Ford,” Willens said. “If you take the radical step of eliminating your valuation allowance, then you’ve developed a high degree of confidence in your future profit-making ability.”

Corporate tax specialist Robert Willens, president of Robert Williens LLC of New York, says the action would be an extremely positive move by Ford. Ford is the only US automaker that did not declare bankruptcy and receive government loans during the recent recession. In another sign of economic progress, Ford reported a 11% sales increase in China for February.