Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : MindSpring Enterprises (MSPG) Another ISP. -- Ignore unavailable to you. Want to Upgrade?

To: Mr Bones who wrote (752)	1/17/1999 11:40:00 PM
From: John Albert Moro	Read Replies (2) \| Respond to of 1434

Mr. Bones: You are correct. The question of the proper accounting treatment for goodwill is quite controversial. One view takes the stand that goodwill should be reported on the Balance Sheet as an Intangible Fixed Asset and should not be amortized till there is evidence of its failure to earn profits, that is to say that amortization would start when the purchaser realized that there was no benefit by paying a price above fair market value. A second view takes the stand that it should be amortized over a realistic period during which the above normal earnings contemplated in the purchase decision is being realized. Still another viewpoint is that goodwill should be deducted in full as a charge to capital in much the same way for example as purchased R&D. Inclusion of goodwill on the financial statements has no benefit, it merely points that the purchaser has paid a price over and beyond the fair market value of the assets of the acquired company, which at some point in time will hopefully add to profit. Indeed, the consensus pertaining to goodwill is that if there clear and identifiable evidence that it was overstated then it should be written down as a charge to capital. I hope this helps. Jam