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To: Ron Bower who wrote (5224)	10/31/1998 3:29:00 PM
From: James Clarke	Read Replies (1) \| Respond to of 78566

<<Example: A company pays above BV for a software company that's carrying a large R&D asset and sets up the Goodwill amortization over a 10 year period. In 10 years the software would likely be obsolete. I would write off both the Goodwill and R&D assets and base forward value of the company purely on anticipated operational cash.>> You're absolutely right. I wasn't thinking of an example like that, but of course there are many companies with such economics. Like you said, none of these rules can be applied mechanically. Jim

To: Ron Bower who wrote (5224)	11/1/1998 1:32:00 AM
From: jeffbas	Read Replies (2) \| Respond to of 78566

If it is true of a software company, as Jim agrees, why isn't it true of most technology companies where the products are obsolete well before 10 years -- like chip companies for example? This brings me back to TMO which started this discussion. That is largely a technology-related company. For example its big instrument subsidiary's products are surely obsolete long before 10 years. So why is a goodwill amortization period of 40 years appropriate? (It would be so only if no goodwill amortization is correct, and therefore the longest period allowable should be used.)