GM's $30B Goodwill Write-up Explained - Page 2

*Mr. Wyndham* · 09-12-2010, 10:31 PM

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?

Quote:

Originally Posted by HeHasReturned

Haha, you're hilarious, I'm a troll for asking you to follow up on your post? Great response

Actually...it's because your comment had nothing to do with the OP.

*The_Blur* · 09-12-2010, 10:50 PM

HeHasReturned · 09-12-2010, 11:41 PM

Quote:

Originally Posted by Dragoneye

Actually...it's because your comment had nothing to do with the OP.

Quote:

OK, someone posted a link to an article which ridiculed GM for manufacturing a $30B asset. I thought I would give the forum a little perspective because I know many of you may be considering investing in GM when it goes public.

FenwickHockey65 · 09-12-2010, 11:46 PM

Quote:

Originally Posted by HeHasReturned

Haha, you're hilarious, I'm a troll for asking you to follow up on your post? Great response

You're a troll because you have absolutely nothing good to say about GM as a company or their products, yet you're still here.

HeHasReturned · 09-13-2010, 12:07 AM

Quote:

Originally Posted by FenwickHockey65

You're a troll because you have absolutely nothing good to say about GM as a company or their products, yet you're still here.

Oh, you got me! OH wait, no you didn't!

Quote:

Originally Posted by HeHasReturned

This doesn't erase the fact that the zr1 still offers great bang for buck performance wise.

Quote:

Originally Posted by HeHasReturned

Looks pretty nice, but I'm not really a fan of wagons..Only hatchbacks lol

Quote:

Originally Posted by HeHasReturned

The CTS-V is a great performer also

Quote:

Originally Posted by HeHasReturned

Camaro should win in both cases, but the SS vs. Turbo S would be a good race

Quote:

Originally Posted by HeHasReturned

The Regal GS is a different story though. As long as it's performance is similar to the Cobalt SS, while addressing all the shortcoming of the Cobalt SS (cheap interior/build quality), then it might be worth looking at

FenwickHockey65 · 09-13-2010, 08:52 AM

Wow, five posts. Still doesn't change the fact that the majority of your posts offer nothing constructive to this site and that you're still a troll.

Berean · 09-13-2010, 10:48 AM

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?

Xanthos · 09-13-2010, 11:02 AM

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?

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.

Berean · 09-13-2010, 12:41 PM

Quote:

Originally Posted by Xanthos

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.

I'm trying to understand what required them to balance it. A decrease in liabilities, i.e. lost equity from the stock holders and bond holders?

That's how I was reading the OP.

Georgie · 09-13-2010, 12:49 PM

why would a firm issue an unqualified opinion on those statements if their accounting for Goodwill isn't GAAP (or is it, see below)?

wait... this type of treatment is GAAP? so to plug the gap they capitalize the difference as Goodwill?? shouldn't that be a one time gain or loss on the income statement instead... i don't get this scenario.

OR... is that simply the government's goodwill since isn't the government the reason their equity went positive?

Georgie · 09-13-2010, 12:59 PM

Quote:

Originally Posted by Xanthos

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. -

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.

yes, you test it for impairment and the amount goodwill decreases by is charged to the income statement as an expense for the period.

HeHasReturned · 09-13-2010, 01:04 PM

Quote:

Originally Posted by FenwickHockey65

Wow, five posts. Still doesn't change the fact that the majority of your posts offer nothing constructive to this site and that you're still a troll.

And yet you were wrong because you said "absolutely nothing."

And you are not offering anything constructive to this thread by calling me a troll.

For risk of further derailing this thread, I'm just going to stop posting in it. I suggest you do the same.

2010-1SS-IBM · 09-13-2010, 01:32 PM

Goodwill is the difference between what all the assets and liabilities net to, and what the company is purchased for.

It sounds strange, but it's basically the premium the market offers for the intangible (those things that can't be valued) assets like intellectual property (knowledge) that a company has.

FenwickHockey65 · 09-13-2010, 02:18 PM

Quote:

Originally Posted by HeHasReturned

And yet you were wrong because you said "absolutely nothing."

And you are not offering anything constructive to this thread by calling me a troll.

For risk of further derailing this thread, I'm just going to stop posting in it. I suggest you do the same.

Sorry, I don't take advice from trolls. And I, unlike you, actually offer something to this site.

09-12-2010, 10:50 PM	#16
The_Blur Moderator Drives: 2018 Harley-Davidson Street Bob Join Date: Nov 2007 Location: San Diego Posts: 14,768	__________________ RDP Motorsport//GEN5DIY//Cultrag Performance//JPSS//Rodgets Chevrolet// Operation Demon//Buy at Invoice//RACECARWEAR RESPECT ALL CARS. LOVE YOUR OWN. warn 145:159 ban

09-13-2010, 08:52 AM	#20
FenwickHockey65 General Motors Aficionado Drives: 2023 GMC Canyon, 2023 Expedition Join Date: Aug 2008 Location: Florida Posts: 37,375 View My Garage	Wow, five posts. Still doesn't change the fact that the majority of your posts offer nothing constructive to this site and that you're still a troll. __________________ 2023 GMC Canyon Elevation 2023 Ford Expedition SSV (State-Issued)

09-13-2010, 12:49 PM	#24
Georgie Drives: Camaro... soon Join Date: Aug 2008 Location: Chicago Posts: 1,217	why would a firm issue an unqualified opinion on those statements if their accounting for Goodwill isn't GAAP (or is it, see below)? wait... this type of treatment is GAAP? so to plug the gap they capitalize the difference as Goodwill?? shouldn't that be a one time gain or loss on the income statement instead... i don't get this scenario. OR... is that simply the government's goodwill since isn't the government the reason their equity went positive? __________________ 2011 IOM or CGM 1SS

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09-13-2010, 10:48 AM	#21
Berean Drives: Truck Join Date: Apr 2010 Location: Home Posts: 2,439	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?

09-13-2010, 01:32 PM	#27
2010-1SS-IBM Drives: 1998 Nissan, 2010 Camaro Join Date: Jul 2009 Location: Dallas, Tx Posts: 827	Goodwill is the difference between what all the assets and liabilities net to, and what the company is purchased for. It sounds strange, but it's basically the premium the market offers for the intangible (those things that can't be valued) assets like intellectual property (knowledge) that a company has.