$TSLAQ In this quarter's $TSLA accrual sweepstakes, it just got weird. The big winners are prepaids, depreciation & warranties. Totals 234m. Sales return reserve & deferred revs are so under disclosed I have no idea if it was a payment or a reversal of accruals. (1/9)
Prepaids: simple account. Pay something in advance (rent/insurance), expense over time. There is some variance between payments and capitalization. But, you can see the trends surprise profit quarters. (2/9) 
Depreciation: $TSLA adopted units of production. Volume should dictate the total amount of depreciation not per unit. Plus, Shanghai was added this quarter as well. Zack did mention overhead absorption again in the call. (3/9)
@montana_skeptic theory of goodwill warranty charges applied to service costs is coming into focus. No reversals similar to Q3 2019. Straight forward reduction of accruals of $32m. (4/9)
Sales Return: This account is my favorite for two reasons. First, I believe it is a masking effort by management to mitigate the understanding of credit risk the company has assumed. Second, even within $TSLAQ, there is little appreciation of what information is provides. (5/9)
This is the first quarter where the accruals and associated COGS are not provide in any manner. These give us the internal gross margins that $TSLA actually believes they operate within. I have no idea if the decrease is due to payments or accrual (6/9)
Deferred Revenues: I have no explanation for this reconciliation. It's clear they recognized as much as possible this quarter. Even so, it does not balance from either their mistake or mine. They have increased current deferrals from $630m @ 12/31 to $1,163m @ 3/31. (7/9)
Critical Audit Matters in the 10k 2019 specifically focused on two accounts: warranties & sales return reserve. Warranties did not have a reversals of accruals similar to Q3 2019. Sales return reserve, outside of balances, is simply not disclosed. (8/9)
I interpret this as a means to appease/hide the manipulations of these accounts from external. D&O carriers understand risk much better than external. The loss of their carriers is much more significant than external audit. Litigation is always a better auditor. (9/9)
