charges for the year ending in December 2000 amounted to 340 million for the Jim Henson Company and 600 million for Speed Investment. In its annual report. EM. TV commented that "the salient factor for the write-offs was that, at the time of the acquisitions, the expert valuation was determined by the positive expectations of the capital markets. This was particularly expressed through the use of corresponding multiples." Despite the large write-offs, a considerable amount of goodwill, related to the acquisition of Speed Investment, remained part of EM.TV's assets. This amount of 1.41 billion was equal to 170 percent of EM.TV's book value of equity. Given the questionable financial health of Speed Investment, did the initial 2.07 billion of goodwill ever represent a true economic asset? Was it reasonable to expect to receive 2.07 billion in future economic benefits from a firm that had not been able to earn profits in the past? If not, was the 600 million write-down adequate? 1. What balance sheet adjustments should an analyst make if she decided to record an additional writedown of 1.41 billion in the December 2000 financials? 2. What effect would this additional write-down have on EM.TV's depreciation expense in 2001? (Assume that the adjustments to EM.TV's balance sheet are in conformity with current IFRSs.)