hi, Earth to Eagle One: it appears that some of your transmission was garbled.
...there are alot of questionable or unexplainable - huge - expenses that simply do not make sense - to anyone with an accounting degree...
Since i just turned 16 ten days ago, i do not have "an accounting degree." My Dad is the Head Bean Counter for an S&P 500 company. He has a degree from one of those Universities with plants growing on the front of their buildings and more than 20 years experience.
While we haven't looked at each of the charges yet (and most likely won't bother to), there appears to be nothing out of the ordinary.
Here are a few general definitions that relate to the items you expressed a lack of understanding of:
GOING-CONCERN VALUE
value of a company as an operating business to another company or individual. The excess of going-concern value over asset value, or liquidating value , is the value of the operating organization as distinct from the value of its assets. In acquisition accounting,
going-concern value in excess of asset value is treated as an intangible asset, termed goodwill. Goodwill is generally understood to represent the value of a well-respected business name, good customer relations, high employee morale, and other such factors expected to translate into greater than normal earning power. However, because this intangible asset has no independent market or liquidation value, accepted accounting principles require that goodwill be written off over a period of time. The Revenue Reconciliation Act of 1993 provides that goodwill and related intangible assets can be deducted ratably over a 15-year (180-month) period on a straight-line method.
MERGER
combination of two or more companies, either through a pooling of interests , where the accounts are combined; a purchase, where the amount paid over and above the acquired company's book value is carried on the books of the purchaser as goodwill; or a consolidation, where a new company is formed to acquire the net assets of the combining companies. Strictly speaking, only combinations in which one of the companies survives as a legal entity are called mergers or, more formally, statutory mergers; thus consolidations, or statutory consolidations, are technically not mergers, though the term merger is commonly applied to them. Mergers meeting the legal criteria for pooling of interests, where common stock is exchanged for common stock, are nontaxable and are called tax-free mergers. Where an acquisition takes place by the purchase of assets or stock using cash or a debt instrument for payment, the merger is a taxable capital gain to the selling company or its stockholders. There is a potential benefit to such taxable purchase acquisitions, however, in that the acquiring company can write up the acquired company's assets by the amount by which the market value exceeds the book value; that difference can then be charged off to depreciation with resultant tax savings. Mergers can also be classified in terms of their economic function. Thus a horizontal merger is one combining direct competitors in the same product lines and markets; a vertical merger combines customer and company or supplier and company; a market extension merger combines companies selling the same products in different markets; a product extension merger combines companies selling different but related products in the same market; a conglomerate merger combines companies with none of the above relationships or similarities.
AMORTIZATION
accounting procedure that gradually reduces the cost value of a limited life or intangible asset through periodic charges to income. For fixed assets the terms used is depreciation , and for wasting assets (natural resources) it is depletion, both terms meaning essentially the same thing as amortization. Most companies follow the conservative practice of writing off, through amortization, intangible assets such as goodwill. It is also common practice to amortize any premium over par value paid in the purchase of preferred stock or bond investments. The purpose of amortization is to reflect resale or redemption value.
Amortization also refers to the reduction of debt by regular payments of interest and principal sufficient to pay off a loan by maturity. Discount and expense on funded debt are amortized by making applicable charges to income in accordance with a predetermined schedule. While this is normally done systematically, charges to profit and loss are permissible at any time in any amount of the remaining discount and expense. Such accounting is detailed in a company s annual report.
|
