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Chairman's Letter - 1983

berkshirehathaway.com · 11,455 words · saved by 4 readers

This appendix deals only with economic and accounting Goodwill – not the goodwill of everyday usage. For example, a business may be well liked, even loved, by most of its customers but possess no economic goodwill. (AT&T, before the breakup, was generally well thought of, but possessed not a dime of economic Goodwill.) And, regrettably, a business may be disliked by its customers but possess substantial, and growing, economic Goodwill. So, just for the moment, forget emotions and focus only on economics and accounting. When a business is purchased, accounting principles require that the purchase price first be assigned to the fair value of the identifiable assets that are acquired. Frequently the sum of the fair values put on the assets (after the deduction of liabilities) is less than the total purchase price of the business. In that case, the difference is assigned to an asset account entitled "excess of cost over equity in net assets acquired". To avoid constant repetition of this m

Chairman's Letter - 1983 BERKSHIRE HATHAWAY INC. To the Shareholders of Berkshire Hathaway Inc.: This past year our registered shareholders increased from about 1900 to about 2900. Most of this growth resulted from our merger with Blue Chip Stamps, but there also was an acceleration in the pace of �natural� increase that has raised us from the 1000 level a few years ago. With so many new shareholders, it�s appropriate to summarize the major business principles we follow that pertain to the manager-owner relationship: o Although our form is corporate, our attitude is partnership. Charlie Munger

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