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Non-Tech : Berkshire Hathaway Class B -- Ignore unavailable to you. Want to Upgrade?

To: Benkea who wrote (1299)	1/24/2000 4:57:00 PM
From: Richard Forsythe	Read Replies (1) \| Respond to of 1652

I think it's reference to the fact that "goodwill" (the general concept) is the difference between market value and book value. When one company buys another, the acquiree's goodwill is explicitly included in the acquirers book value. The goodwill of the acquirer is now market value less book value plus goodwill shown on the balance sheet. Under US GAAP, the goodwill on the balance sheet is slowly "pushed" into the market valuation over x years (assuming purchase accounting). Under pooling-of-interests, the goodwill is "dumped" into the market valuation immediately. In the UK (for example), the goodwill can be left on the balance sheet indefinitely (lowering ROA, but not earnings). I think WEB prefers the UK accounting method... Richard

To: Benkea who wrote (1299)	1/24/2000 5:09:00 PM
From: Jacques Newey	Read Replies (1) \| Respond to of 1652

Benkea- Sorry, I am an engineer, not an accountant. Let me know if my logic is off here. Assumptions: 1.) Your estimate of Intrinsic Value for Brk.A = $60,000/share. (I thought you posted this number on Yahoo thread, maybe I am wrong?) 2.) Intrinsic Value > Current Book Value for BRK. 3.) From your previous post I garnered that the only "hidden" or understated value in BRK would be in understatement of goodwill. Therefore I concluded that the understated value (oops I didn't post that) was equal to the understated goodwill. Maybe I found my error. How about this? Understated Goodwill = $60,000 - Book Value (all BRK.a per share basis). I need to do some more reading. I still don't have a good feel for goodwill. I do know that goodwill was one area where WEB deviated from Graham. I feel a bit like a kindergardener in grad school. Thanks for your help.