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Buffett bemoans volatility under new accounting rule

Tammy Whitehouse | February 26, 2019

Berkshire Hathaway is feeling the volatility that comes with observing new accounting rules, and its prompting Warren Buffet to rethink how he reports financial results to investors.

In his annual letter to shareholders, Buffett, chairman at Berkshire Hathaway, says he’s breaking with three decades of tradition by not opening the annual letter with the percentage change in the company’s per-share book value. “It’s now time to abandon that practice,” he reports, as the metric has “lost the relevance it once had.”

Berkshire earned $4 billion in 2018 under Generally Accepted Accounting Principles. That includes $24.8 billion in operating earnings, a $3 billion non-cash loss resulting from intangible asset impairments, $2.8 billion in realized capital gains from the sale of investments, and a whopping $20.6 billion loss from a reduction in the amount of unrealized capital gains sitting in the company’s...

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