The May 16, 2005, issue of the Wall Street Journal includes an article by Pui-

Wing Tam titled “Will H-P’s Hurd Wipe the Slate Clean?”

Instructions Read the article and answer the following questions.

(a) What are some of the reasons given for expecting that Hewlett-Packard will make a significant write-down against its goodwill? What would this charge relate to?

(b) According to accounting standards, how is goodwill to be accounted for?

(c) What is one possible reason given for why Mr. Hurd’s predecessor CEO at Hewlett-

Packard did not take a large write-off on goodwill?

(d) What other examples of large goodwill write-offs are given in the article?

INTERPRETING FINANCIAL STATEMENTS