Zif Software is a firm with significant research and development expenses. In the most recent year, the firm had $100 million in research and development expenses. R&D expenses are amortizable over 5 years and the R& D expenses over the last 5 years are as follows:
|
Year |
R&D expenses |
|
-5 |
$ 50 million |
|
-4 |
$ 60 million |
|
-3 |
$ 70 million |
|
-2 |
$ 80 million |
|
-1 |
$ 90 million |
|
Current year |
$ 100 million |
Assuming a linear amortization schedule (over 5 years), estimate
a. the value of the research asset.
b. the amount of R&D amortization this year.
c. the adjustment to operating income.