BusinessCompany NewsAOL to take $60bn goodwill hit

AOL to take $60bn goodwill hit

AOL TimeWarner, the media and internet giant, will be forced to record a charge of around $60bn (£41bn) in the first quarter of 2002 due to a new accounting rule.

The new US accounting rule on goodwill acquisitions – FAS 142 – effective from 1 January 2002, means that the company must record the one-off hit following the $350bn merger of AOL and Time Warner.

In its preliminary results, published on Monday, the company said ‘the 2001 results exclude certain one-time nonrecurring charges that are expected in the fourth quarter, including approximately $50m of merger-related costs’.

Much of the goodwill paid by AOL for Time Warner has been wiped out by the recent crash in the value of media companies.

Chief executive officer Jerry Levin will step down in May as announced last year. He will be replaced by Dick Parsons.

The company will report its full financial results for 2001 on 30 January 2002.Shares in AOL rose 2.3% to $32.68 at the market close on Monday, but fell back to $32 yesterday.

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