Question

The following is an excerpt from a conversation between the chief executive officer, Rob Rameriz, and the chief financial officer, Maurice Chandler, of Nile Group, Inc.:

Rameriz (CEO): Maurice, as you know, the auditors are coming in to audit our year-end financial statements pretty soon. Do you see any problems on the horizon?
Chandler (CFO): Well, you know about our “famous” Hill Companies acquisition a couple of years ago. We booked $1,000,000 of goodwill from that acquisition, and the accounting rules require us to recognize any impairment of goodwill.
Rameriz (CEO): Uh oh.
Chandler (CFO): Yeah, right. We had to shut the old Hill Company operations down this year because those products were no longer selling. Thus, our auditor is going to insist that we write off the $1,000,000 of goodwill to reflect the impaired value.
Rameriz (CEO): We can’t have that—at least not this year. Do everything you can to push back on this one. We just can’t take that kind of a hit this year. The most we could stand is $200,000. Maurice, keep the write-off to $200,000 and promise anything in the future.
Then we’ll deal with that when we get there.
How should Chandler respond to the CEO?



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  • CreatedMay 29, 2012
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