Verizon Communications Inc. is the latest telecommunications giant to announce changes in its accounting methods related to its pensions and other post-employment benefits.
The New York-based company on Friday announced that it would incur a pre-tax charge of $600 million for the 2010 year as a result of the accounting change.
Verizon said its new accounting policy recognizes gains and losses in the year they are incurred, rather than amortizing them over time. The company added the accounting change does not impact its cash flow or pension funding requirements.
Our decision to adopt the new accounting policy will make our financial reporting easier to understand and more transparent,” said Fran Shammo, Verizon executive vice president and chief financial officer, in a statement.
Earlier this month, AT&T disclosed that it was adopting the same accounting policy and would incur a pre-tax, non-cash charge of $2.7 billion in the fourth quarter as a result of a change in its accounting practices.
AT&T also said the change would result in more transparent financial results.