MGSC30H3 Chapter : Ch12 Notes
Document Summary
With its continuing interest in going public, cm 2 is concerned about its level of reported earnings. In particular, conner and martin have expressed concern about the amount of research and development (r&d) expense they see on the forecasted financial statements. As conner noted, intangibles don"t have any physical presence, so why should they be part of the asset base? . Cm 2 reports goodwill on its balance sheet. Knepp and lopez indicate that the goodwill was from the acquisition of small garage-type software development companies purchased a few years ago. Cm 2 purchased the software companies so that it could incorporate their software into the cm 2 product line as well as to gain the expertise of their employees. Conner and martin argue that no amortization should be recorded for goodwill because they have heard there is no reliable way to establish a useful life for the goodwill.
