Tuesday, November 25, 2008

Goodwill Hurting

(That oughta leave a 'mark'. - AM)

November 24, 10:43 pm est
by Nathalie Boschat

PARIS -- As the recession bites and stocks continue to slide, acquisitions made by European companies at the height of the merger boom could become a time bomb, as accounting rules are likely to force some businesses into heavy write-downs on goodwill when they report 2008 earnings.
International Financial Reporting Standards have been used by most countries since 2005, but this year marks the first time they will be implemented against the backdrop of a sharp economic slowdown and a heavy stock-market selloff, accountants and experts say, warning that companies could take a severe hit as a result.

In Europe, the total amount of goodwill for companies included in the Dow Jones Stox 600 index is about 1 trillion euros.

This compares with a total market capitalization of 3.507 trillion euros as of Friday's close.

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