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Politics : Politics & Broadcast News Media - Nightly

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To: greenspirit who wrote (140)	1/10/2002 7:23:09 PM
From: Tadsamillionaire	of 165

US set for $1 trillion of Internet writeoffs FROM CHRIS AYRES IN NEW YORK US COMPANIES could be forced to write off a total of $1 trillion (£690 billion) in the first three months of this year to cover the cost of acquisitions made at the peak of the Internet boom, analysts said yesterday. Under new accounting rules that have already forced AOL Time Warner to write off up to $60 billion, US companies will have to give details of the amount they overpaid for acquisitions during the boom of the late 1990s and early 2000. The write-offs will be unprecedented in stock market history and will result in US businesses reporting losses of a magnitude never seen before. Although the write-offs are book-keeping exercises that do not involve any cash, they will prove to be embarrassing for many chief executives. In AOL’s case, the write-off suggests that Gerald Levin, the former head of Time Warner, did not get a good deal when he merged the media group with AOL. Mr Levin is to stand down as chief executive of AOL in May. The new accounting rules, introduced by the Financial Accounting Standards Board (FASB) on January 1, force US companies to declare any fall in the value of “goodwill” they paid for acquisitions. Goodwill is the premium paid for an acquisition over and above what accountants call the “fair value” of its assets. The fall in the stock market value of high-tech companies since early 2000 has resulted in hundreds of billions of dollars of this goodwill being wiped out. But before the new accounting rules were introduced US companies could spread goodwill charges over a period of up to 40 years, effectively making it irrelevant. Now companies have to report changes to goodwill annually. More @ thetimes.co.uk Get Ready for the Great depression!

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