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Gemstar recorded an expense of $131.6 million to write down its TV Guide assets.
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The company would not have to pay a penny, so why record an expense?
MeadWestvaco will also record an expense of $2 million to close three plants.
Gillette said in a Securities and Exchange Commission filing that it would record an expense of 4 cents a share in 2005 for the closing.
Lynn Turner, the chief accountant of the S.E.C., also notified the accounting profession that these companies will have to record an expense that will lower profits.
The logic to the rule was that since the options would in the end be valuable only if the share price rose, there was no need to record an expense when the options were issued.
They will also have to record an expense (the "annual required contribution") for the amount they would need to stash away to fund this long-term liability fully over 30 years.
Allstate, one of the largest auto insurers in the nation, will record an expense of $70 million, or 10 cents a share, for closing claim offices and redesigning its customer information centers.
As it happens, that development became public just as the public comment period ended on proposed new accounting rules that could force companies to record an expense for the value of options.
The company, which also plans to reduce the size of its German office, expects to record an expense of as much as $30 million in the fiscal fourth quarter and another $30 million in fiscal 2006.
The implication of this principle is that you cannot always wait until cash changes hands to record an expense.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com