| Grooski said: For the common folk who don't have a clue what the hell this means. Sony gets tax credits for making a loss in previous years, reducing their taxable income this year. Under US law (remembering Sony is an international company) this credit is only applied if Sony can show reasonable probability that they will return to net profit in three years. This is their third year and they are still in a rolling loss. Sony have indicated that they will create a $1billion operating profit next year, but the uncertain costs of the earthquake/tsunami mean they cannot be sure. As a precaution, and because of these US regulations, they have included a valuation of 360 billion yen on the asset (ie written off the asset). This is just an accounting write-off It doesn't affect anything to do with how Sony is travelling this year, in fact, Sony made a $700million operating profit. They don't have to pay more taxes now, but if they don't return to profits in the next 1-2 years, this write off will become an actual write-off hitting their bottom line. |
WOW well detailed explanation thx a lot. =)
