"It is the middle ground between light and shadow…and it lies between the pit of man's fears and the summit of his knowledge."
An apt description of the latest FASB pronouncement on fair value? Not quite. Fans of classic television may recognize those lines from the introduction to the very first season of The Twilight Zone. Fifty years later that ode to light and shadow could just as well pertain to a different sort of zone: the zone of insolvency. It's a not-quite-middle ground between solvency and bankruptcy, and for CFOs it can be a very disorienting place indeed. Once in this zone, a company must shift its focus from shareholders to creditors, or risk a very unpleasant day in court.
Unfortunately, there is no bright line that indicates when a company has crossed over. But it's certain that as the recession grinds on, more and more companies will make that journey nonetheless. Senior editor Vincent Ryan offers a tour of the signposts and some sage guidance on how to navigate this curious dimension that is anything but imaginary. (See his cover story, "World Turned Upside Down.")
Bright lines are often lacking in the world of taxation as well, but you can expect the states to turn up the wattage in an effort to prove that your company is on the wrong side of whatever lines they claim to see. Faced with their own fiscal crises, and loath to increase taxes, many states are coming after companies more aggressively these days, as senior writer Kate O'Sullivan describes in "The Tax Men Cometh."
The states have, of course, received a substantial boost from the federal stimulus package. So, too, has the health-care system, notably in the form of $19 billion for projects that further the cause of electronic medical records. The technology has the potential to improve the efficiency of the health-care system, which just might provide relief to companies in the form of more-modest rises in health-insurance premiums. Contributing editor Josh Hyatt explains why doctors may get on board this time, and when companies may feel less pain ("Strong Medicine"). With all due respect to Rod Serling, let's hope this proves to be a triumph of Sci over Fi.