Berkshire Hathaway 2004 Annual Report Download - page 43

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Notes to Consolidated Financial Statements (Continued)
(8) Goodwill of acquired businesses
Effective January 1, 2002, Berkshire adopted Statement of Financial Accounting Standards (“SFAS”) No. 142
“Goodwill and Other Intangible Assets.” SFAS 142 changed the accounting for goodwill from a model that required
amortization of goodwill, supplemented by impairment tests, to an accounting model that is based solely upon
impairment tests. Thus, Berkshire’ s Consolidated Statements of Earnings for 2004, 2003 and 2002 include no periodic
amortization of goodwill. A reconciliation of the change in the carrying value of goodwill for 2004 and 2003 is as
follows (in millions).
2004 2003
Balance at beginning of year .......................................................................................... $22,948 $22,298
Acquisitions of businesses and other.............................................................................. 64 650
Balance at end of year .................................................................................................... $23,012 $22,948
(9) Inventories
Inventories are comprised of the following (in millions):
December 31, December 31,
2004 2003
Raw materials ..................................................................................................... $ 527 $ 472
Work in progress and other................................................................................ 256 215
Finished manufactured goods ............................................................................ 1,201 1,175
Goods acquired for resale................................................................................... 1,858 1,794
$ 3,842 $ 3,656
(10) Property, plant and equipment
Property, plant and equipment is comprised of the following (in millions):
December 31, December 31,
2004 2003
Land .................................................................................................................... $ 312 $ 291
Buildings and improvements ............................................................................. 2,525 2,317
Machinery and equipment.................................................................................. 5,763 5,212
Furniture, fixtures and other............................................................................... 1,332 1,259
9,932 9,079
Accumulated depreciation.................................................................................. (3,416) (2,819)
$ 6,516 $ 6,260
(11) Derivatives
A summary of the fair value and gross notional value of open derivatives contracts follows. Amounts are in
millions.
December 31, 2004 December 31, 2003
Trading Trading Notional Trading Trading Notional
Assets Liabilities Value Assets Liabilities Value
Foreign currency forwards .................................... $ 1,767 $ 6 21,445 $ 635 $ 6 11,347
Interest rate and foreign currency swaps ............... 6,043 7,651 153,185 11,426 11,623 333,842
Equity options written and purchased ................... 69 380 4,626 185 396 3,940
Foreign currency options written and purchased... 343 352 6,083 435 813 9,359
Interest rate options written and purchased ........... 500 893 28,961 2,024 2,793 92,912
8,722 9,282 14,705 15,631
Adjustment for counterparty netting ..................... (4,488) (4,488) (10,186) (10,186)
Trading account assets and liabilities.................... $ 4,234 $ 4,794 $ 4,519 $ 5,445
Berkshire utilizes derivatives in order to manage economic risks of its businesses as well as to assume specified
amounts of market or credit risk from others. Beginning in 2002, Berkshire began to enter into foreign currency forward