I was looking at Yahoo's balance sheet because I'm thinking on investing in the company. Under Non-Current Assets, there is a line item called "Cost in Excess" and represents about $3 billion dollars. Not sure what it is.
Nicholas
nickymayne.blogspot.com
2006-09-21 05:56:32 · 7 answers · asked by bimmayute1 1 in Business & Finance ➔ Investing
I believe that is goodwill. For 2005 they were 2.895 bil.
Basically when a company buys another company and pays more for it than the underlying assets, the excess is booked as goodwill. In the 10k filing for Yahoo, they are referred to as goodwill. I see no other item under assets that it could be and by definition goodwill is a cost in excess of assets. Normally, when one is evaluating the true net assets of a company, one should subtract goodwill and intangible assets. They are a bookkeeping item only.
2006-09-21 06:21:59 · answer #1 · answered by Anonymous · 0⤊ 0⤋
If this is an audited financial statement I agree that there should be, and probably is, a footnote explaining this item. After all $3 billion is a lot of money.
Sounds to me it is most likely what is commonly known as "goodwill" or "cost of acquisition in excess of net assets". For example, Sears decides to buy Kmart. The two companies agree on a price of $4 billion even though Kmart's balance sheet says net worth is $1 billion. What happens to the $3 billion difference? Sears could expense it all at once, but that is not what usually happens. The new balance sheet will include an asset for $3 billion which will be expensed (read written off or amortized) over time.
The second possibility, but $3 billion sounds outrageous, is "cost in excess of billings". One commonly sees this on the balance sheet of a construction or similar company. The firm has done work but not billed the customer. The "cost in excess of billings" is an asset and will become "accounts receivable" once invoiced. I think of it like work in progress inventory but for a service firm. On the liability side of the balance sheet, there will most likely be an entry for "billings in excess of cost" which is just the reverse.
Now that I re-read you question and think some more, cost in excess of billing would almost certainly be a current asset, I stick with my first explanation.
Hope this helps.
2006-09-21 06:23:14 · answer #2 · answered by Adoptive Father 6 · 0⤊ 0⤋
Costs In Excess Of Billings
2016-10-04 23:14:56 · answer #3 · answered by ? 4 · 0⤊ 0⤋
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RE:
What does "Cost in Excess" mean on a balance sheet?
I was looking at Yahoo's balance sheet because I'm thinking on investing in the company. Under Non-Current Assets, there is a line item called "Cost in Excess" and represents about $3 billion dollars. Not sure what it is.
Nicholas
nickymayne.blogspot.com
2015-08-18 16:49:03 · answer #4 · answered by Myrtia 1 · 0⤊ 0⤋
If there is no explination in the footnote, assume obvious. Cost in excess would mean more than what they budgeted for.
2006-09-21 06:09:07 · answer #5 · answered by #Reistlehr- 4 · 0⤊ 0⤋
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2016-03-19 09:51:56 · answer #6 · answered by ? 4 · 0⤊ 0⤋
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2016-04-11 00:01:47 · answer #7 · answered by Anonymous · 0⤊ 0⤋
The financial statement footnote disclosures should have an explanation.
2006-09-21 05:59:26 · answer #8 · answered by Matt M 5 · 0⤊ 0⤋