2. Business Takeovers Buyer’s Book Limited Company take over a Sole Trader Limited Company take over the Partnership Limited Company take over the Limited Company

3. PCCW Takeovers HK Telecom

4. PCCW HK Telecom Net Assets 470 Billion Purchase Consideration 2,250 Billion Goodwill

5. Assets Taken Over at Their Revised Values Furnitures and Fixtures Business Purchase Furnitures and Fixtures Dr. Assets Cr. Business Purchase

6. Liabilities Taken Over Business Purchase Creditors Business Purchase Dr. Business Purchase Cr. Liabilities

7. Purchase Consideration Agreed Upon Business Purchase HK Telecom Business Purchase Dr. Business Purchase Cr. Vendor ( e.g. HK Telecom)

8. Loss on Acquisition Goodwill Business Purchase Goodwill Dr. Goodwill Cr. Business Purchase

9. Or: Profit on the Acquisition Business Purchase Capital Reserve Business Purchase Dr. Business Purchase Cr. Capital Reserve

10. Settlement of the purchase consideration by cash and/or issuing shares and debentures HK Telecom Cash Ordinary Shares Debentures Dr. Vendor (e.g. HK Telecom) Cr. Cash Cr.Ordinary Shares Cr.Debentures

11. Settlement of the purchase consideration by cash and/or issuing shares and debentures Ordinary Shares HK Telecom Debentures HK Telecom

12. Web Sites of PCCW PCCW Page 54 Summary of Financial Information Page 71 Consolidated Income Statement Page 73 Consolidated Balance Sheet Page 75 Balance Sheet