The change in accounting that was pondered and abandoned by the Blackstone Group was confusing. Fortunately, Breakingviews.com has clarified the situation a bit. It had come up with a way to use FAS 159 to book profits on investments as if they were options. If the value goes up, they win and and can book profits. If the value goes down, they are not able to book any profits, like an option that fell out of the money. Well, investors effectively nixed the idea. But that doesn't mean that Blackstone will only book profits when it realizes them. They're back to the old system, which means it values all investments at the end of the year and accrues its carried interest as if they had been sold. The change would have resulted in nearly $600 million in extra revenue.

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