The online edition of the March 5, 2002, Wall Street Journal includes an article by John Carreyrou entitled

“Vivendi May Reveal Write-Down of Up to $13 Billion for Goodwill.”

Instructions Read the story and answer the following questions. (Subscribers to Business Extra can access the article at that site.)

(a) Vivendi currently prepares its financial statements using French GAAP. As revealed in the story, how do French and U.S. GAAP differ in the accounting for goodwill impairments? Does the story reveal other areas in which U.S. and French GAAP differ? Explain.

(b) Why are some analysts warning against reading too much negativity into Vivendi’s expected goodwill write-down? Do you agree? Explain.

(c) What measure of profitability is used in the media business? Explain how, if at all, this measure of profitability might be affected by Vivendi’s changes in accounting, as discussed in the story.