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New financial instrument rule draws Buffett rebuke

Tammy Whitehouse | May 11, 2018

New accounting rules on how to reflect financial instruments in financial statements are beginning to produce predicted earnings volatility, as recently bemoaned by America’s celebrity investor, Warren Buffett.

In his annual letter to shareholders as chairman at Berkshire Hathaway, Buffett says the new accounting rule will “severely distort” the company’s net income figures, misleading commentators and investors. “For analytical purposes, Berkshire’s ‘bottom line’ will be useless,” he writes. The letter drew heavy attention recently when the board released its first-quarter results showing a $1.1 billion loss.


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