Ask Rande 10,000+

Top 676. Jan 8, 2002 7:46 AM

» Rande - Tax Time

Here's a pretty good site for general income tax info, the tax guides at the bottom are pretty good:

http://www.fairmark.com

-- posted by Rande

Top 677. Jan 8, 2002 2:49 PM

» ACousins - FASB 142

I couldn't find a discussion on this topic so sorry if it's already been beat with a stick.

Seymour on RM discussed how this will knock billions off of balance sheets:

And especially, overwhelmingly, the hidden pea in Monday's Spin City shell game: AOL's upcoming one-time $40 billion to $60 billion charge as it rejiggers its books to meet the requirements of FASB 142, which changes the rules on amortization of goodwill (what you paid over current market value) from its merger with Time Warner a year ago.

Right: Those are Bs, as in billions. Forty to sixty of them. Pain, with a capital P.

AOL is hardly going to be alone in eating its own balance sheet here -- FASB means lots of big tech companies are going to take massive equity hits during 2002 -- but as one of the early ones to confront FASB 142, I think it's going to see its shareholders running for the hills when they realize that this will erase maybe one-third of shareholder equity from the books.

In the two years since this "merger" -- let's tell the truth: It was an acquisition of Time Warner by AOL, not a merger of equals -- the market value of the two companies has fallen by about half. Now, losing another one-third of its current value will be a real kick in the teeth...
I think then AOL will take off -- but from a lower basis than today's price

Is this built into the price of equities these days or is this still not out there yet?

-- posted by ACousins

Top 678. Jan 8, 2002 3:15 PM

» Rande - Re: FASB 142

In response to message posted by ACousins:

FAS 142, "Goodwill and Other Intangible Assets," which eliminates the amortization of goodwill, is actually expected to boost EPS as companies make the switch. The new standard became effective Jan. 1st for companies that follow a calendar year and basically eliminates the need to amortize the goodwill acquired when buying other companies. For companies that used purchase accounting in the past, the new standard could evidently translate into an increase of as much as 11% in earnings per share next year (something analysts should be well aware of by now). However, FAS 142 also explicitly states that companies must test the goodwill on their balance sheets for impairment at least every year, and it includes more stringent requirements for assessing that goodwill. That's a change from the past, when companies would simply make adjustments to the speed at which they amortized the goodwill. If the target was worth less than when they bought it, they would write the goodwill off more quickly. Looks like AOL might have found more than a little impairment there.

BTW -- Yet another reason to focus on free cash flow, which is not impacted by amortization.

-- posted by Rande

Top 679. Jan 8, 2002 7:11 PM

» gorby - non-conforming states

Rande----Hope I haven't already missed the answer to this one: Does Ks. conform to the increases in both Roth IRAs and 457s? Sounds like this could be a real headache for the uninformed. If you don't have the answer handy, I can always make some calls.
Thank you Rande!
gorby

-- posted by gorby