In Process Randd
Beginning of paper
PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT
When one company purchases another, it absorbs the acquired firm’s assets and liabilities onto its balance sheet. One part of the acquired company that belongs to neither area is in-process research and development. “Acquired in-process re ....
Middle of paper
.... to an in-process R&D write-off.
Effects on Future Periods
Current and future results can be affected significantly by the allocation of the purchase cost of a business. When the acquired company is involved in research and development for products not yet developed, generally accepted accounting principles (GAAP) allow the acquirer to allocate a portion of the purchase price to IPR&D. If IPR&D were an asset, it would have to be subtracted little by little from future earnings. Amounts paid ....
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Word count: 2347
Page count: 9 (approximately 250 words per page)
