Fair Value Accounting at Berkshire Hathaway Inc (A)

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Case

Reference no. 9-119-030

Subject category: Finance, Accounting and Control

Authors: Jonas Heese (Harvard Business School); Suraj Srinivasan (Harvard Business School); Francois Brochet (Harvard Business School); Christine Johnson (Harvard Business School)

Published by: Harvard Business Publishing

Originally published in: 2018

Version: 10 April 2019

Revision date: 15-Apr-2019

Length: 19 pages

Data source: Published sources

Topics: Accounting; FASB; Securities

Share a link: https://casecent.re/p/158409

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Abstract

In May 2018, Berkshire Hathaway announced an unprecedented loss of more than USD1 billion for the first quarter of 2018. Warren Buffett blamed this loss on the new accounting rules for equity securities which he criticized. In the case 'Fair Value Accounting at Berkshire Hathaway, Inc' students will evaluate the impact of a new rule related to the fair value accounting as it pertains to Berkshire Hathaway and Alphabet. Students will debate the topic of relevance and reliability in fair value accounting as compared to historical cost accounting and discuss the intended purposes of the balance sheet and income statement (with particular attention to net income). Students will also have a chance to review the business model of Berkshire Hathaway to debate how to measure and report the economic performance of Berkshire Hathaway.

Industry:

Financial services

Other setting(s):

2017-2018