Qwest faces $22bn accounting write-off
Embattled US telecoms company Qwest Communications may be forced to write off $21.8bn in goodwill by the end of the year as new accounting rules take effect, according to consultancy Stern Stewart & Company.
The rule says that companies must carry out regular reviews of the goodwill – representing the company’s intangible assets such as market reputation and brand name – on their balance sheets and adjust accordingly.
Similarly, Stern Stewart believes long-distance carrier WorldCom may have to reduce the goodwill on its balance sheet by $37bn.
Earlier this month, Qwest along with collapsed telecom giant Global Crossing, admitted it had been contacted by chief US financial watchdog, the Securities & Exchange Commission.
Qwest was asked to provide the SEC with documents relating to its dealings with Global Crossing, which is under a probe by the regulator.
Both companies, audited by Andersen, said at the time they would cooperate with the financial regulator.