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Technology Stocks : Dell Technologies Inc.

DELL 125.97

-1.0%

Nov 25 3:59 PM EST

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To: Chuzzlewit who wrote (147546)	11/17/1999 12:25:00 AM
From: Michael G. Potter	Read Replies (2) of 176387

You really shouldn't capitalize R&D. You just don't know what project will pan out. An on-going company will have fairly constant to increasing R&D. At some point (let's say a five year amortization), the amortization equals the amount capitalized and you're left with a problematic asset on the balance sheet. It is based on expense, not future profit and the valuation is really unknown. It isn't that hard to find out the charges hitting the income statement, they tend to be in the 10-Q's and the other SEC filings that come out during an acquisition. If the abusive valuations are stopped (and they have gone way down since the SEC put their foot down), the current IR&D rules work pretty well. There are tons of choices that have to be made in the current accounting framework. I'd go after the accounting for options far before I went after IR&D/purchase accounting. Michael

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