MSFT Internet Explorer vs. NSCP Navigator Message Board

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Technology Stocks : MSFT Internet Explorer vs. NSCP Navigator

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To: Winston Chang who wrote (3365)	11/24/1996 2:38:00 AM
From: Gerald R. Lampton	of 24154

>So, losses from MSN and the like are not R&D. Production costs of IE through the >point of "technological feasibility" is considered R&D, but costs after that are >deferred costs (which flow to cost of sales), and marketing costs are also not - they >are expensed to selling, general, and administrative expenses. In a recent "Above The Crowd" E-mail newsletter, it says: "Surprisingly, MSN has had little affect on Microsoft's income statement. This may be because the company accounts for MSN by charging the difference between revenues and costs as a R&D expense, rather than recognizing MSN as a standard revenue generating business." It seems to me that "the difference between revenues and costs" is the same thing as a "loss." IF what "Above The Crows" says is true, would this be in accordance with GAAP? Is there any way that accounting for losses from MSN as Research and Development could comply with GAAP? Reg, Lawrence, Tom Reardon, what can you say about this?

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