If investors take Warren Buffett’s advice to ignore unrealized stock market gains in reported results, Salesforce’s (CRM) FY22 results are significantly less impressive.

The Financial Accounting Standards Board (FASB) requires companies to report changes in their equity investments in quarterly and annual results. But many, including Buffett, have urged investors to ignore mark-to-market adjustments as stock market gyrations can distort reported results and make it more difficult to evaluate operating earnings.

In its latest 10-K, Salesforce reported $1.44 billion in FY22 net income. Included in net income— consistent with GAAP accounting— is a $1.2 billion gain from strategic investments, most of which includes mark-to-market adjustments in publicly traded and privately held companies. If we back out this gain and use the company’s 5.86% tax provision rate, the company earned $302.2 million, or 1.1% of revenue generated.

Investment gains account for 83.8% of Salesforce’s reported FY22 net income.

Expect even larger gyrations in the company’s $4.8 billion investment portfolio in the next reporting period as Salesforce’s fiscal year ended in January and doesn’t take into account the market volatility of February and March 2022. For example, a 10% decrease in the enterprise value of Salesforce’s largest privately held equity securities— which accounts for 41% of the portfolio— could result in an unrealized loss to Salesforce’s investment portfolio of $165 million, or 54.6% of FY22 net income excluding strategic investment gains.

Separately, Salesforce also uses an accounting loophole to make its balance sheet look stronger than it is. The company says it has $3.6 billion in undiscounted future operating lease liabilities. This understates Salesforce’s true liability since the company doesn’t count leases not yet commenced. The additional liability— $1.1 billion which is buried in a footnote— significantly understate the company’s future liabilities.

The $1.1 billion in leases “not yet commenced” is 30.5% of Salesforce’s undiscounted operating lease liabilities, and 2.96% of total liabilities.

Under the loophole, companies can omit from the balance sheet leases that haven’t started as well as corporate offices under construction or build-to-suit arrangements. It’s seemingly inconsistent with FASB’s guidance on the topic which states if a lease is legally binding— as Accenture acknowledges— Topic 842 (ASU 2016-02) makes clear it must be accounted for on the balance sheet:

“A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability)...”