Riedel said Nortel has been advised this is the figure Industry Canada would use to determine whether a review is required by the Investment Canada Act, which mandates a review of all foreign acquisitions exceeding $312 million.

Ericsson has agreed to pay more than US$1 billion, and the book value was calculated by adding current assets of $111 million to fixed assets of $38 million. Asked why Ericsson would offer more, Riedel said Ericsson would see greater value in the intangible assets, including customer relationships and the potential for growth.

Masse said it was his understanding the $312 million cutoff in the Investment Canada Act refers to the "enterprise value."

But in later testimony, Industry Canada officials confirmed the $312 million refers to the book value.

Marie-Josee Thivierge, the federal industry department's assistant deputy minister for small business and marketplace services, said she is prohibited by law from discussing specific cases, but said the book value would be determined using the most recent audited financial statements, prepared according to generally accepted accounting principles (GAAP).