(FORTUNE Magazine) – Is it a trick or a treat for shareholders? Bank of New York, now trying to take over Irving Bank Corp., has proposed a bit of accounting artistry that should reassure anyone who fears bankers lack the imagination to dig themselves out from under fermenting LDC loans. If BONY gets Irving, it plans to use purchase-price accounting procedures to write down about $500 million of Irving's Third World loans to fair market value, currently about 60 cents on the dollar. On its own, Irving could not do this without the $200-million difference reducing reported profits all at once. But under purchase-price accounting, the same $200 million -- or at least the part of it that cannot be assigned to undervalued Irving assets -- is treated as goodwill. In that case, the Bank of New York can take up to 40 years to write it down, although chief financial officer Deno Papageorge thinks a quarter century should suffice. Meanwhile, BONY would sell the newly valued loans right away, probably within a year. Why couldn't the same magic be applied on a grander scale? Say, for instance, if some monster institution were to buy every bank in the country that holds unrecognized LDC loan losses? Overnight, through the miracle of purchase-price accounting, the major impediment to writing down those loans -- the one-time shock to earnings -- would disappear. Papageorge admits the scenario is technically possible. Finding a buyer for all that debt, though, might be a little like waiting for the Great Pumpkin.