How GM made $30 billion appear out of thin air
 

This is absolutely amazing. It should serve as a warning for any of you considering purchasing GM stock when they have their IPO.


"It will be a long time before General Motors Co. can shake the stigma of being called Government Motors. Here’s another nickname for the bailed-out automaker: Goodwill Motors.

Sometimes the wackiest accounting results are the ones driven by the accounting rules themselves. Consider this: How could it be that one of GM’s most valuable assets, listed at $30.2 billion, is the intangible asset known as goodwill, when it’s been only a little more than a year since the company emerged from Chapter 11 bankruptcy protection?

That’s the amount GM said its goodwill was worth on the June 30 balance sheet it filed last month as part of the registration statement for its planned initial public offering. By comparison, GM said its total equity was $23.9 billion. So without the goodwill, which isn’t saleable, the company’s equity would be negative. This is hardly a sign of robust financial strength.

GM listed its goodwill at zero a year earlier. It’s as if a $30.2 billion asset suddenly materialized out of thin air. In the upside-down world that is GM’s balance sheet, that’s exactly what happened.

Indeed, the company’s goodwill supposedly is worth more than its property, plant and equipment, which GM listed at $18.1 billion. The amount is about eight times the $3.5 billion GM is paying to buy AmeriCredit Corp., the subprime auto lender. Another twist: GM said its goodwill would have been worth less had its creditworthiness been better. Talk about a head- scratcher."

Entire article:
http://www.bloomberg.com/news/2010-0...than-weil.html

Quit crying.:cry: If it was Ford you wouldn't have said a word!!!! It is business and it happens everyday everywhere!!! Have a good day CAMARO HATER!!!!

Doesn't change the fact that no matter what, Ford still sucks...

ummm, I'm trying to find 'goodwill' on the balance sheets of any company I do business for....

I don't think that quite happens everyday, everywhere.

Schooling - so sit down and take notes... Goodwill is not "people feel good about us". Goodwill is a dollar amount that is equal to the difference between the sale price and the asset value.

You will never ever buy a functioning company for the asset value. You will pay asset plus revenue profitability over time. In this case i suspect the purchase price is based on the determined ipo value and the book price is likely asset value. The goodwill is the difference between those two.

You would only list goodwill during the reporting period for which you are selling your company.

I thought it was for the buyer. One company buys another and the difference between the price and the total assets was goodwill?

Not the selling company in an IPO....maybe I'm wrong though, been a while.

Oh and PS - ford should be recognized with a congressional medal and a holiday named after them... They saw the downturn did the correct course of action made the tough choices and managed a better business. They did better than any other us auto manufacturer. Im not a hater - I'm just stating fact.

:troll:

It doesnt happen every day, everywhere. 1bad65 isnt a "Camaro hater", trust me.

This is a fairly legitimate topic of conversation, and doesnt need to turn nasty.

DITTO

Id rather be called Government Motors then UAW Motors, only reason Furd got by is by borrowing billions from the UAW AKA mob. GM has 4 legs to stand on with the Gov and cna do what they want, Furd has to bend to the will of the UAW on its 3 legged chair or risk falling over.

you have no life if your a mustang fan actively posting on a camaro forum...

that goes for all of the LOSERS with mustang avatars here!
:stang:

You want some cheese with that?

Closed,

:facepalm:

If someone else would like to repost this article in such a way that it fosters mature discussion, feel free.

:thumbsup: