GM Quarterly Loss One of the Biggest in Corporate History
November 7th, 2007Via: Yahoo / AP:
General Motors Corp. posted a company record $39 billion loss in the third quarter, as a charge involving unused tax credits brought an abrupt end to string of three profitable quarters for the nation’s largest automaker.
The loss reported Wednesday was one of the biggest quarterly corporate deficits ever and it sent GM’s shares down more than 8 percent in premarket trading.
The loss was attributed to a $38.6 billion noncash charge largely related to establishing a valuation allowance against accumulated deferred tax credits in the U.S., Canada and Germany, as well as mortgage losses at GM’s former financial arm, GMAC Financial Services.
But accounting rules require that companies expecting to keep losing money cannot keep carrying deferred tax credits indefinitely and must write down the value of such credits.
