Key Points:

There is an admission of an accounting kind in the Government's latest accounts that the Government paid too much for rail.

A note reveals that the rail business the Government paid $690 million for on July 1 last year valued up at $442m in September.

The September valuation is a provisional assessment. A final valuation will be completed a year from the original purchase.

"No goodwill has been recognised and the difference between the provisional assessment of fair value of the assets acquired and liabilities assumed and the cost of acquisition has been charged to the statement of the financial performance," the note states.

In other words, the Government wrote off $248m on the investment less than a year after making it and there may be more to come.

The accounts show that KiwiRail made a loss of $4m in the six months to December 31 on turnover of $332m.

The Government bought the rail and ferry business from Toll Holdings of Australia, having earlier purchased the track for $1. Toll continues to own the trucking and freight forwarding assets once owned by Tranz Rail and has purchased other companies in New Zealand.

It reports its profit next week.