Report: Boeing May Revamp Pension Accounting

On Tuesday, The Wall Street Journal broke the news that Boeing (NYSE: BA  ) is considering switching from accounting for pension obligations under Generally Accepted Accounting Principles (GAAP) to "non-GAAP" accounting.

The new system, termed "mark-to-market" accounting, would calculate the value of Boeing's pension fund, and its pension obligations, based on the value of the securities in said fund on a date certain, once per year. Because the value of such securities -- such as stocks -- can swing wildly over the course of a year, mark-to-market accounting introduces the risk of sudden, significant changes in the value of the pension fund, potentially distorting the view of Boeing's overall profits and losses.

Boeing says it's inclined to make the change to improve the transparency of its balance sheet, The Wall Street Journal reported. Opponents of mark-to-market accounting say the GAAP approach spreads changes in pension obligations over time, smoothing out results and avoiding wide swings in the supposed value of these obligations. Boeing says it will make a final decision on the move in January.


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