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Technology Stocks : THQ,Inc. (THQI)
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To: Zirdu who wrote (12871)1/28/2000 3:19:00 PM
From: wolfdog2  Read Replies (1) of 14266
 
Ranney, it's considered more conservative to expense R&D rather than carry it as asset. If you expense R&D it lowers your earnings and the quality is better, so to speak. The other side of the coin is that by expensing all R&D up front, you don't fairly match revenues and expenses. In fact what you do is inflate future earnings, which is what all the hullabaloo about companies taking massive write-offs is all about.

In THQ's case, I think they only capitalize R&D for games that are actually going to ship. If they've been puttering around on the drawing board and draw a blank, I'm fairly certain that they simply expense it and close the book on it.
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