A reduction in deferred tax liabilities of 348 million Swiss francs was also recorded, giving a net charge of 813 million Swiss francs in the consolidated re- sults. Also included within this is a minor amount relating to impairment on a small number of products acquired in an earlier acquisition as a consequence of reduced market expectations. Under the Group's previous accounting pol- icy, no impairment would have arisen. As a result of the impairment, the net book value of intangible assets was reduced by the amount of the impairment charge, and consequently amortization in the first half of 2000 was 64 million Swiss francs lower than it would have been under the previous policy.

a. Describe the effect of the accounting change on the year 2000: (i) Income before the effect of accounting changes (ii) Net income (iii) Stockholders' equity (iv) Cash from operations

b. Describe the effect of the accounting change on the year 2001. (i) Net income (ii) Return on equity (iii) Cash from operations 16. [Impairment and depreciation lives]. IEC Electronics [IECE], a provider of electronics manufacturing services, re- ported impairment charges in 1998 and 1999 and a change in asset lives in 1999. Exhibit 8P-4 contains extracts from IEC's 1999 annual report.

a. Discuss whether the 1999 impairment charge and deprecia- tion change should have been a surprise when they were an- nounced on September 30, 1999.