西方会计英语Unit eight Acquisition accounting

（单词翻译）

[00:03.66]Text 8.2        Honeymoon¹ accounting² offers financial advantag
[00:09.74]The launch last week of TI Group's hostile bid for Dowty, the aerospace³ company ,raised familiar questions about how Mr Christopher Lewinto
[00:18.26]the TI chairman accounts for acquisitions in his rapidly growing engineering grou
[00:23.69]Although wihin accounting standards, TI's past treatment of acquisitions is almost certain to figure prominently in Dowty's defence this mont
[00:31.76]The ensuring debate will again highlight current accounting rules which grant acquiring companies a financial honeymoon during which to reorganise their priz
[00:40.54]a luxury not available to the same degree to incumbent⁴ management
[00:44.59]Ironically Mr Michael Garner⁵, TI's finance director ,is a member of the Accounting Standards Board which later this year will produce a draft standard covering the treatment of fair value adjustments on acquisition
[00:57.23]This well-established practice allows the cost of reorganising an acquisition to be defrayed without impacting on profit
[01:05.31]It has been widely criticised as a way in which ordinary operating costs can be 'lost' boosting reported profits and earning
[01:13.25]The acquisition accounting issue looms⁶ particularly large for T
[01:17.66]Its rapid transformation⁷ since 1986 from Tube Investment has involved a heavy acquisition programme and an equally heavy use of fair value adjustment
[01:27.82]Over the period it spent about $500m on acquisitions and another $100m on reorganisatio
[01:34.69]Almost all acquisitive companies make use of the practic
[01:38.51]At its simplest it allows an acquiring company to identify costs of reorganisation
[01:43.92]redundancies and plant closures  and to set up provisions in the balance sheet against which future costs can be charge
[01:50.97]But in 1990, TI was widely criticised in the City for taking the practice to the limits of what was acceptabl
[01:58.18]Fair value provisions are usually set up soon after an acquisition and released over 18 month
[02:03.92]In its 1989 accounts TI made $92m of fair value provisions,some ￡59m of which related to'additional'goodwill write-offs relating to its 1988 acquisitions.
[02:17.43]The 'additional'provision was more than half that year's pre-tax profits of $112
[02:24.43]Critics said these costs ,referred to as a major rationalisation of manufacturing facilitie
[02:30.49]systems and organisational structures in the 1989 accounts,might have been better treated as exceptionals or operating costs in what was by then an on-going busines
[02:41.70]Mr Lewinton and Mr Garner insist there was nothing wrong with this treatment-and indeed Price Waterhouse, TI's auditors⁸, did not qualify the account
[02:51.21]"We had always had an agreement with our auditors that we would not rush to finalise provisions in one balance sheet,said,Mr Garne
[02:58.78]The reasoning behind this 'second bite' at the provisions had,however ,been poorly  communicated to the Cit
[03:06.20]Some analysts⁹ have argued there is more to TI's second bit
[03:10.69]First of all, TI had 11 months after the acquisition of Bundy, in Apirl 1988 ,before the auditors signed off the 1988 accounts during which to identify potential write-off
[03:23.08]It also had an opportunity before the bid ,which was agreed, and allowed TI to do full due diligence on Bund
[03:30.70]Mr Garner said that the opportunity for further restrucucturing ,and therefore additional provision
[03:36.53]only came to light once senior members of the Bundy board left nearly a year after the acquistion and fresh ideas from more junior executives surface
[03:45.72]The debate is not academic as it has implications for TI's cash flo
[03:50.90]TI's unbroken record of strongly positive funds generation since 1986 would be severely¹⁰ dented¹¹ if some of its past provisions were treated as on-going operating cost
[04:01.01]In 1989, for instance,a tougher accounting treatment of the second Bundy provision would have meant TI's operations were actually a drain on fund