ACCOUNTING 101 .....let us take a closer look at the effect on BP's finances:

 

ACCOUNTING 101   It seems like a miracle that our anointed leader was able to convince BP to establish a $20 billion slush (oops, escrow) fund to compensate those hurt by the ongoing oil plume in the  Gulf of Mexico . After all, he had no constitutional power to force them to do so; so had to resort to Chicago-style arm twisting.   But, let us take a closer look at the effect on BP's finances:   1. BP will establish a $20 billion fund, but will pay only $7 billion into it during 2010.   2. BP is a British corporation, but has a very large operating entity in the  US .   3. By Generally Accepted Accounting Principles (GAP), BP must book the entire $20 billion expense in the year accrued. Therefore, they will book a $20 billion expense in 2010, reducing their  US  tax liability by $7 billion.   4. Our anointed leader also convinced this massive corporation to show their concern for the "small people" by withholding dividends to their shareholders for the last 3 quarters of 2010.  This reduces their outward cash flow by about $7.5 billion, including approximately 40% of that amount to US citizens.  Assuming that the Bush tax cuts will survive through 2010, the US Treasury will lose another $450 million in taxes on that amount.  We won't even discuss the effect on the  US economy.   Let us put the results into a table easily understood by the small people:   BP Cash Flow: ·        Escrow funding ($7 billion) ·        Dividend saving $7.5 billion ·        Tax savings $7 billion ·        Net favorable cash flow : $7.5 billion   US Treasury Tax Receipts: ·        BP Corporate income tax ($7.5 billion) ·        BP Shareholders' income tax ($0.45 billion) ·        Net unfavorable tax receipts ($7.95 billion)   Wow, what a boon to the American taxpayers.   I guess we really should expect this.  After all, our anointed leader is the most inexperienced man in any room he enters.  (With the possible exception of a meeting of the Amalgamated Chicago Community Organizers and Acorn Association)

 

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