Goodwill - • Should go on balance sheet • How do you estimate •(Retirement health care trickier Pension Liabilities • NY Times article •

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1 Goodwill, Pensions, and Stock Options Balance Sheet Thunder Inc. • Assets – Cash = $100 • Liabilities – None • Bookvalue = $100 Lightening Inc. • Assets – Plant and equipment = $100 • Liabilities – Long term debt = $50 • Bookvalue = 100-50 = 50 Thunder Buys Lightening for $100 • Assets – Cash = 0 – Plant and equipment = $100 – Goodwill = $50 (purchase price - book) • Liabilities – Long term debt = $50 • New book value (Thunder) = 150-50 = 100
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2 Pension Liabilities • Future cash flows owed to retired workers • Similar to debt
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Unformatted text preview: • Should go on balance sheet • How do you estimate? • (Retirement health care trickier.) Pension Liabilities • NY Times article • FASB (Financial Accounting Standards Board) – Rules for adding pension liabilities to balance sheets • For Ford and GM, book value goes negative after adding this Stock Options • Payments to employees • Option to purchase stock at a fixed price • Technically, like a wage : labor compensation • Should be on income statement, but how do you value this?...
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This note was uploaded on 01/02/2012 for the course FINANCE 347 taught by Professor Bayou during the Fall '11 term at NYU.

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Goodwill - • Should go on balance sheet • How do you estimate •(Retirement health care trickier Pension Liabilities • NY Times article •

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