07-14-2008, 01:51 PM
quote:
Originally posted by JWFITZ... Take a look at WAMU this morning, if you haven't.
Seems many corps are taking their charge off's right now. Charge off's are not money moving at all. Just accounting practices to move a item that needs to be depreciated, or bad debt, etc from here to there. Money doesnt move.
It's more like gee, my old blue car is worth xxx because that is what I paid for it in 1989. But not really since it is 20 years old now so I am finally going to take the charge off the diff between the book value (usually what I paid for it) and the real current value. it's move the number from one column to another.
It is still the exact same car as it was yesterday.
Many investors will buy a stock when the real or current value is way below the "book value". Such as a company that bought property in California 30 years ago. The book value may be really low when it is directly opposite to my example above.
Here's an example:
US Airways Group Inc. says it will take a $622 million accounting charge in its second quarter to reflect the effect of soaring fuel prices on its value.
The company says in a Securities and Exchange Commission filing that a review led it to decide to write off the value of "goodwill" it had on its books since the company combined with America West Airlines in 2005. The term refers to the value of intangible assets such as reputation.
US Airways also says it will book an $18 million charge to reflect the decline in value of spare parts for its Boeing 737 aircraft.