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Technology Stocks : Creative Labs (CREAF)
CREAF 0.411+11.2%Dec 8 12:12 PM EST
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To: relentless who wrote (9175)1/28/1998 5:19:00 PM
From: Brad Patton   of 13925
 
To relentless:

Are Research development generally write off during during the acquiring of a company? Or what is written off? So, there earnings did grow then, and not decrease. I thought the eps was decreased, which worried me. How do you find out what is written off?

There are two general write-offs you will see when a company acquires another one. The first is for in-process R&D which is usually reduced from earnings in the quarter in which the transaction completes. The second is for goodwill. Goodwill is an accounting concept used to reconcile the difference in the purchasing price vs the book value (or shareholders equity) of a company. Goodwill is amortized over a period of time.

Usually the companies press release is the best place to look for these numbers. For example from the Creaf press release:

After one-time write-offs -- totaling US$60.3 million -- for in-process technology related to the acquisitions of ENSONIQ, Cambridge SoundWorks and the NetMedia group of OPTi, the results for the second quarter of fiscal 1998 were:

On the income sheet you'll notice a line called
Write off of acquired in-process technology
this is where the 60 million is recorded

For a good general discussions of some of these issues check out:
fool.com

PS. If any of this wrong I'm sure someone on this thread will correct it.
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