Fourth-quarter earnings are rolling in, and so is a new set of hefty write-offs that reflect the tumbling value of bubble-era acquisitions.

The write-offs aren’t just coming from financial corporations recalculating the worth of their toxic loans. Many of the biggest charge-offs of late have come from companies far from the Wall Street fray, such as Jones Apparel, News Corp., Boston Scientific, and Ingersoll-Rand. These companies are writing off billions of dollars in goodwill, as they reevaluate the worth of assets they once paid big bucks to acquire.

Experts predict still more write-offs are on the way. In a January report, Goldman Sachs strategists Abby Joseph Cohen and Michael Moran issued a report noting that the balance sheets of the Standard & Poor’s 500 companies contain more than $2.6 trillion of goodwill and intangible assets. That’s more than half of the companies’ combined book value. Think of it as the leftovers of the M&A binge of the last 10 years.

Now, a good chunk of that will probably have to go.

When Goodwill Goes poor

Goodwill is an accounting term that describes the difference within the price one company pays for another and the tangible assets of the company that’s being bought. whether the buyer pays more than the book value of the acquisition’s assets, it’s called goodwill and put on the acquiring company’s books as an asset. Periodically, though, the acquiring company has to review that goodwill to see whether it’s in good shape.

In many cases these days, it isn’t. Women’s clothing maker Jones Apparel spent much of the past decade vacuuming up other companies in a bid to broaden its offerings and obtain more leverage with retailers. Peter Boneparth, a former investment banker who was Jones’ CEO from 2002 to 2007, bought up jeans companies, suit makers, even the clothing lines of Gloria…

[Source] dhiram