ShmoopTube

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Accounting Allah shmoop goodwill No it's not hunting It's not

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a nonprofit It's an accounting thing that explains all the

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otherwise unexplainable all right K Funk has been running its

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radio station for forty five years and as ratings continue

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to decline it realizes that the wireless spectrum att leases

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a decade at a time from the U S Government

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via a grant from the FCC is worth more than

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whatever multiple cash flow from its stations would give it

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So it decides to sell itself to Verizon which is

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happy to own that extra spectrum allowing it to give

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better wireless phone service to its hungry customers The sale

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Fifty million bucks Well the station has twenty million dollars

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in cash no debt and radio frequency numbers And that's

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it That's what it has Those air its assets Since

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Verizon is going to just shut down the radio station

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one could ask Wait why are you paying thirty million

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dollars for nothing I can touch Well what they're buying

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is the spectrum are at least two Use the remaining

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seven years or whatever it has left on the lease

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from the government All right that's better It's illegal Grant

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It's a piece of paper a deal term courtesy of

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the U S Government for which the radio station essentially

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paid nothing At thirty million dollars for an asset that

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was free How's that work Well the accounting God's air

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thinking and thinking what we name that intangible asset that

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appreciated from nothing to being more thirty million dollars Should

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they call it phantom appreciation of air money made up

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from nothing or Kashmir AJ How about that Know How

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about if they call it good Will Yeah that sounds

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better So when Verizon makes the purchase Nell show that

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for their fifty million dollars they got twenty million dollars

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in cash and they got thirty million dollars in goodwill

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and some funky music Good to hear Bluegrass is making 00:01:57.31 --> [endTime] a comeback

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