Preparing A Financial Statement For The Iran Conflict

For many years, my job was to prepare monthly Financial Statements for the various investment firms I worked for. It is the same task that almost all businesses must perform, although the SEC added some additional schedules, especially for Brokers.

I began with a small regional brokerage house, so the financial statements were simple and easy to prepare. The bookkeeper and I would sit down at the end of the month, sort through the various receipts and statements, determine which category each fit in, and write our monthly report.

It’s a tedious job at best, but it’s also incredibly illuminating, revealing where the firm spends its money and where it receives its income. It can also reveal missing items and expenses that aren’t accounted for (sometimes an oversight, sometimes potential excess, or even fraud).

Today, let’s you and I begin preparing a preliminary Financial Statement for the Iran Conflict. Of course, we won’t have all the figures; many of the expenses have not yet been released by the US Government. But we can at least see the categories and get an “order of magnitude” picture of our Nation’s financial liability.

The first authoritative statement of the War’s cost came from James Hurst, Pentagon Comptroller. Mr. Hurst estimated operational costs at $29 billion (an increase of $4 billion from his prior estimate).

https://www.reuters.com/world/middle-east/us-war-iran-has-cost-29-billion-pentagon-says-2026-05-12/

Although the press was all “atwitter” over this latest statement (because it was an increase over the prior one), it’s perfectly understandable that operational costs in an ongoing operation should rise. What we need to focus on is that this was an estimate of operational costs, nothing more.

https://www.congress.gov/crs_external_products/IN/PDF/IN12692/IN12692.2.pdf

This week, we received a second authoritative report on capital costs from the Congressional Research Service: US Aircraft Combat Losses in Operation Epic Fury: Considerations for Congress.

https://www.congress.gov/crs_external_products/IN/PDF/IN12692/IN12692.2.pdf

Again, this is NOT the cost/expense of the entire conflict; it is only a list of the planes and other equipment that have been lost. Regrettably, the report does not provide a cost estimate for the lost planes and equipment.

There’s a likely reason for this omission. When accounting for a capital loss, an enterprise must determine whether to use the purchase price or the replacement costs. Although this is primarily for tax accounting and not applicable here, it highlights a key point: should we account for the real financial impact of restoring the military to its readiness before the Iran conflict began? I think we should. Take, for instance, the AWACS aircraft destroyed at Prince Sultan Airbase on March 27–28. This aircraft was at least 50 years old and is no longer in production. Producing a replacement aircraft today would be significantly more expensive than its original purchase price.

As we indicated, this report does not provide a comprehensive cost for the lost planes. Here we’ll use another tactic that we sometimes had to use in preparing a preliminary report, a report before all the receipts and statements were in. (It’s something that I had to do in providing monthly financial reports, but might be foreign to companies that provide only annual reports.) When we didn’t have the final data, we provided our best estimate, a “plug” number. We know this number will need revision once the final data comes in, but for now, our best estimate will give us a good overview of our condition.

The best estimate of Plane loss currently stands at $2.4 billion. Obviously, this number is woefully inadequate, but at least it opens the category: Plane (Loss). We’ll now use this category as we build our financial statement for the War. Plane losses will fall under the overall category of Capital (Loss), which will ultimately need to include the loss of US bases and equipment, especially radar, destroyed in the Gulf States.

We know, for instance, that the AN/FPS-132 early-warning radar in Qatar, valued at $1.1 billion, was destroyed, and that this will have to be added to our Financial Statement. Also, the Navy’s Fifth Fleet headquarters in Bahrain was significantly damaged, with a current estimate of $200 million in damaged equipment and facilities. These reports have also opened up a new category of capital expense: Base and Equipment (Loss).

So, just by recording official data as it’s provided and organizing it as any accountant or bookkeeper would, we’re starting to get a realistic financial view of the War, including anticipated expenses yet to be reported.

James Hurst at the Pentagon told us that operational expenses stand at $29 billion. No official report has been issued on capital (loss), but we do know two parts of that schedule: plane (loss) is estimated at least $2.4 billion, while base (loss) is estimated at least $1.3 billion. Altogether, this puts our current, very conservative estimate of the Iran Conflict at nearly $33 billion, with the understanding that major expense/loss categories have yet to be reported.

Put more bluntly, the $33 billion figure for Iran Conflict losses is the lowest level, expected to rise substantially as the White House and Pentagon release additional reports. It puts the Iran Cost Ticker’s current reading of $88 billion in context. Although we can’t yet see that level of US spending on the War, we can see a trajectory that will take us there.

On the other hand, for those news organizations that have conflated James Hurst’s current operational expenses (which omit capital expenses, such as the loss of planes, radar, etc.) at $29 billion with the overall expenditure for the War, it’s apparent that the number is woefully understated.

Overall, the Iran War is demonstrating how the public debate is failing the American Public. Numbers are thrown around with little effort to put them in their proper context (accounting category). Much of this is due to the Administration’s failure to provide timely and relevant accounting data.

The American citizens have a right to know just how much they’re spending on this conflict. And to know just how much it will cost to restore our military to the level of competency it had before February 28, 2026. There can be little doubt that our Armed Forces have suffered significant financial losses during this conflict — and that we have only a very limited view of just how much.

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