Sorry for the harsh response to your other post. As for writing off the goodwill, I agree that it would simplify things. That's something else you can blame on the accounting profession - unnecessarily complicated balance sheets. I worry, however, that all these pundits would respond by saying "See, I told you it was worthless." Well, WCOM never claimed it was worth a dime - they had no choice but to put it on the books.
Have I ever posted here my explanation of how, under GAAP, when you buy another company your calculator automatically stops using conventional math and switches to GAAP mode where 1+1 sometimes equals 10? Well, that's purchase accounting. All investors would be much better off, and would have more hair left, if they just lopped off all goodwill, an equal amount of book equity (which is generally irrelevant anyway) and added back the associated amortization to past reports of income. The funny part is that the silly accountants thought they could fix things by changing the rules on amortization - you no longer have to amortize it, but just write it down every now and then whenever someone at the audit firm decides it's "impaired." They only confused people more.
But then, that's the way they think - make it complicated so that they can justify billing you for more hours. They do it with tax laws. Lawyers do it too. Why not auditors?
Bob |
