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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (14790)	7/16/2001 3:54:00 PM
From: Boca_PETE	Respond to of 42834

SkeeterBug - Your allocated free support time has expired. P !

To: Skeeter Bug who wrote (14790)	7/22/2001 7:14:26 PM
From: Boca_PETE	Read Replies (1) \| Respond to of 42834

New Accounting Rules effective July 1, 2001 for Accounting for Business Combinations. They are summarized at the FASB website (see below link): accounting.rutgers.edu To Briefly Summarize: * All Mergers must be accounted for as a PURCHASE which generates GOODWILL (No more Pooling-of-Interests Accounting where book values added and no goodwill is generated). (CISCO is not going to like this). With a purchase, the investment is reflected on the acquiring company's books at the value of the shares given to the acquired company. The excess of that value given over the book value of the company acquired is reflected as GOODWILL on the acquiring company's balance sheet. * All periodic amortization of existing goodwill to cease immediately effective July 1, 2001. The former rule required amortization of Goodwill over 40 years. - Instead of periodic amortization, GOODWILL to be TESTED for IMPAIRMENT at least annually. - If test determines that goodwill is not recoverable from future operations, company must write goodwill down to the computed recoverable amount in period of the test. Go forward, it will be interesting to see if the prohibition against "Pooling-of-Interests" in accounting for stock-for-stock mergers inhibits future acquisitions - especially in the high tech area which had been taking advantage of that accounting in recent years. If it does, it will be interesting to see what effect such inhibition will have on the U.S. economy. P