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Re: None

Tuesday, 05/02/2006 12:19:47 PM

Tuesday, May 02, 2006 12:19:47 PM

Post# of 115222
they didn't give it to them for "nothing". There was a stock deal.

There is also a few million (can't remember exactly how much) that Aurus owes. A common accounting practice is to space out payments for an asset over a given number of years.

This means that if they are spacing the cost to mine the properties over the 10-year life, then the amount of cash they are going to end up paying to the Russian government will be 10 X whatever their short/current long term debt is. So they more than likely are owing about $150 million for the property mining rights.

They report it this way for a number of reasons.

They don't show the entire cost of the asset in one year, the same way you don't report the salvage of a valuable piece of property in one quarter as rise in net income.

If you do that then a lot of people buy in, the next quarter they don't sell any assets, and the net income is down 45% or whatever it was up the previous quarter because of it.

I think it was worldcom that didn't follow this practice and got into a bunch of trouble.