Quote:
Originally Posted by Dragoneye
Superfly, I do have one question -- maybe it's buried in there somewhere and I missed it. 
If the "goodwill" mark is a paper-only balance to the equation resulting from the switchover to 'new GM', then how will it ever be written down and removed? Does any actual money need to be spent or diverted? |
I may be wrong on this, but the way I interpreted it, over time the sale value of GMs assets will increase to a more fair value, which would decrease the gap between the reported value of GMs assets and the value of their equity, therefore eliminating the need for the goodwill balance.
- X
P.S. -
Quote:
Originally Posted by Berean
It seems like you're saying that the equity that was wiped out in the "old GM", i.e. stock holders and bond holders, is now being counted as a goodwill asset in the "new GM" because both sides of the equation must balance.
Am I reading it wrong?
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It seems to be more along the lines of GM went bankrupt, therefore their liabilities decrease in value. However, at the same time the treasury infused a large amount of equity - more than the decrease in liabilities. Left side goes down, right side goes up, therefore something has to be added to the left side to balance the equation.