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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: quasimodo who wrote (17482)	7/31/2003 12:01:10 AM
From: rjm2	Read Replies (1) \| Respond to of 79044

Dont shoot the messenger ! I just want BONT & EBSC to both double by next month. ok ?

To: quasimodo who wrote (17482)	7/31/2003 8:40:19 AM
From: Grantcw	Respond to of 79044

Hello Quasimodo and rjm, I'm a financial reporting accountant and did the accounting for two acquisitions for my company (which is neither EBSC nor BONT) this year. That being said, I don't pretend to speak for BONT and how they're going to do their accounting, but this is how I imagine it will be done: My understanding is that BONT would pay $80 million while EBSC has a book value of $205 million (1st Qtr earnings report). As has been stated, the pooling of interests method of accounting doesn't exist any longer, there's only the purchase method. So, when a purchase is done, the book value of the company being purchased should be equal to the purchase price after the acquisition. So, basically, EBSC's balance sheet would go from a $205 million book value to an $80 million book value. That's a pretty big drop, eh? In the past, negative goodwill was put onto the balance sheet and amortized, but this is no longer allowed. Now, the drop generally occurs first by lowering the carrying value of the long-term assets. So, my guess is that all of the long-term assets would be lowered to a carrying value of 0 (from ~116 million) and then current assets would be lowered also by ~9 million in order to get the book value of the company equal to the purchase price. Again, this is just a hypothetical analysis as to my opinion of would happen if the deal went through and my analysis was done based on the 1st quarter balance sheet which is obviously not going to be the real values now. Thanks, CW (Holder of EBSC but not BONT)