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General Motors Corp. (NYSE: GM) today announced it will record a net noncash charge of $39 billion for the third quarter of 2007 related to establishing a valuation allowance against its deferred tax assets (DTAs) in the U.S., Canada and Germany.

Not everyday you can restate your balance sheet by $39 billion.  Apparently, if you lose money long enough, then FASB rules assume that there is a good chance you may never use your tax-loss carry-forwards, so they have to be written down.

Posted on November 6, 2007 at 05:27 PM | Permalink


A huge loss in shareholder equity, on the balance sheet, for sure.

Posted by: Dave | Nov 6, 2007 8:46:28 PM

My understanding is that there is a "more likely than not" criterion here - if it is more likely than not that some or all of the deferred tax asset will not be realized, you establish a valuation allowance for the portion that is less than 50% likely of being realized. $39 billion is a lot of carryforwards that are less than 50% likely of being realized.

Posted by: nicole | Nov 6, 2007 10:19:15 PM

I read a few months ago that Rick Wagoner declared China was not a threat because they are a "low-wage, not a low-cost" producer.

Aside from full-size SUVs, their 2-seat supercar, and maybe their C-class competitor, where is GM really competitive?

And the Koreans are just coming up to speed now, with the Chinese some ways behind them...

And the Germans have discovered Lean.

Posted by: Bearster | Nov 7, 2007 9:32:49 AM

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