Valuation for Financial Reporting : Fair Value Measurements and ...

Implementation Aids 199ProvidedN/AIn Process Research and Development (Continued)q q 6. In the absence of cost records, estimate effort to create the in-processresearch and development:a. who would work on the assignment (employees and consultants);b. pay rates for individuals in 6a; andc. information to determine overhead rate.q q 7. What products or services will employ the in-process research anddevelopment?q q 8. Provide projections of products and/or services that will employ thein-process research and development for the next five years.a. Project revenues including licensing income for the lifespanof the in-process research and development.b. Project direct expenses associated with producing revenue in 8a.c. Obtain or develop indirect expenses (i.e., overhead).Know-Howq q 1. Describe know-how, including competitive advantages and disadvantages.q q 2. Describe industry trends and competitive pressures that may affect theuseful life of the know-how.q q 3. In light of 1 and 2 above, what is the estimated useful life of theknow-how?q q 4. What products or services employ the know-how?q q 5. If available, provide historical cost records documenting development of theknow-how:a. person hours to develop;b. various technical levels of persons working on the assignment;c. pay scales for individuals in 5b; andd. information to determine overhead rate.q q 6. In the absence of historical cost records, estimate corporate effort torecreate the know-how if it were to be developed from scratch:a. who would work on the assignment (employees and consultants);b. pay rates for individuals in 6a; andc. information to determine overhead rate.(continued)