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Strategies & Market Trends : Value Investing

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To: rjm2 who wrote (17479)	7/30/2003 11:57:01 PM
From: quasimodo	Read Replies (2) of 79045

"This guy doesn't know what he's talking about. Pooling of interests accounting isn't even ALLOWED anymore." True. Just clicked send too soon I guess ... "There is ABSOLUTELY POSITIVELY going to be negative goodwill in the acquisition. That's got to be accounted for SOMEHOW. Either BONT writes down EBSC's assets......or it records a huge GAIN if it's going to record EBSC's assets at historical cost." You sure like to get things going huh ? There is not going to be negative goodwill. The purchase method requires that the fmv of the company be reduced to equate it to the purchase price. In this case, the new carrying value may be less than the fmv. "Since BONT is paying cash, the purchase price is $80 million, anyway you slice it. The question is how do you allocate an $80 million cost to over $200 million worth of net assets (i.e. equity). The guy on SI doesn't know what he's talking about. " If your dear friend does, why doesn't he look up an accounting book himself ? Is that too difficult ?

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