I don’t know if it’s entirely a compliment to the rest of this blog that one of the most all-time popular posts (at the time of writing, it’s 11^th out of more than 360, with over 1,000 views) is the one I wrote some years ago on Accounting for Girlfriends…

I feel a little guilty about it because I didn’t write the original Accounting for Girlfriends material – my blog post was just responding to someone else (as far as I know, the author is unidentified). Perhaps I also ought to regret the appeal of such frivolity to readers, but hey, everyone needs a break from the serious stuff. Anyway, the original material doesn’t betray the greatest modernity in some of its content and implied attitudes (some websites identify it as IAS 69 and others as IFRS 69, but it has an old-world air that aligns it with the IAS-denoted standards rather than the newer, shinier IFRS-series). In my original post, I listed a few areas that might usefully be addressed by application guidance. Here now are some further thoughts on how the initiative might be extended.

The core recognition premise was that:

• a girl shall be recognized as a girl friend if, and only if: (a) it is probable that future physical benefits associated with the girlfriend will flow to the boyfriend, (b) no possibility of GF becoming a long term liability (wife) exists and (c) the expenditures to be incurred (e.g. in respect of gifts, cards etc.) can be measured reliably.

I take it that the resulting asset would be regarded as tangible rather than intangible, embodied in the physical substance of the girlfriend. But perhaps the asset ought to be the intangible relationship rather than the person at the other end of it. This would require some amendment to IAS 38, given that such a relationship (citing the current identifiability criteria) isn’t separable and doesn’t arise from contractual or legal rights. But then, as we’ve often said, IAS 38 could probably use enhancing anyway. One advantage of this approach would be that the model could work equally well for boyfriends or even for polyamorous structures, thus reducing the sexism of the original proposal. Further, I would explore applying the revised intangible model to all qualifying relationships whether or not formalized by marriage, therefore combatting the further sexism apparent in viewing a wife as a long-term liability (if you prefer to come at that a different way, it may not necessarily take a wedding ring for a sense of weary captivity to take hold).

The original proposal didn’t specifically address the measurement of the girlfriend asset – presumably it envisaged a cost-based model, but didn’t specify (for instance) what costs are eligible, or at what point capitalization should cease. Clearly our revised standard needs to address this, and I think the modern world requires a fair value model. This will very plainly be the all-time “level 3” measurement (we may need to invent a “level 4”) but that shouldn’t scare us away. As so often, the selection of a discount rate may be particularly challenging, possibly changing not just from period to period but from hour to hour, as the long-term desirability of one’s partner waxes and wanes.  An advantage of the fair value model is in avoiding needing to grapple with impairment testing (although of course the inputs for both would be somewhat aligned).

The disclosure aspects of the original were distinctly problematic, for example:

• complexion, face cut
• email address, residential address and mobile no. of each girlfriend
• any “special” benefits that may have been derived from the girlfriend

This sounds like a note to be posted on a pimp’s bulletin board, raising all kinds of questions of confidentiality and possible harm (not least to the boyfriend, once the girlfriend finds out what he’s been saying about her). It’s true that it may be hard to adequately disclose the measurement assumptions and sensitivities without providing some information on those “special” benefits. But I would suggest it shouldn’t even be mandatory to disclose the partner’s gender, let alone to provide pinpointed coordinates of where he or she hangs out. The danger of “disclosure overload” will be acute here of course, because once some people start talking about their partners, they just can’t stop…

Going back to that pimp reference, it’s not the only unsavory indication in the original of what the writer really thinks of his girlfriends (for instance, it’s posited that the useful life would be affected by “expected ‘physical’ wear and tear, which depends on ‘operational’ factors such as the number of ‘shifts’ the girlfriend is to be used”) (shifts!!). It’s clear that the IASB must avoid all such implications, concentrating on progressivity and equality, or failing that, on a greater awareness that any user may one day realize him- or herself to have been equally as used, and discarded. And with that, I turn it over to them!

Again, happy holidays!

The opinions expressed are solely those of the (highly forward-thinking) author.