Re:Zynga stock plummets below value of its cash and real estate
by steve8918 on Thursday October 11, 2012 @01:35AM
(#4639586)
You cannot depreciate a write down. If you have an impaired asset, like OMGPOP, you have to write it down to whatever the new value is. Depreciation doesn't enter into the picture.
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Re:Zynga stock plummets below value of its cash and real estate
by lmm on Thursday October 11, 2012 @06:27AM
(#4640220)
Yes and no. I suspect in practice Zygna have quite a lot of control over how to value OMGPOP, and could have chosen to (for the moment) value it somewhere closer to what they paid for it had they wanted to.
Re:Zynga stock plummets below value of its cash and real estate
by steve8918 on Thursday October 11, 2012 @09:58AM
(#4640771)
Based on US GAAP, whenever there is an "indication of impairment", ZNGA is required to present a model to the auditors justifying any goodwill and some intangible assets attributed to things like OMGPOP. If Draw Something suffers a user drawdown of 50% or 66% (not sure what the current daily users are) since the acquisition, they would be hard-pressed to justify to their auditors the value of the assets are anywhere near what they have on the books. They might have some wiggle room, but not nearly as much as people on this thread appear to believe.