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Unformatted text preview: incurred internally to create the intangibles bear no relationship to the their real value. An intangible may cost $1,000,000 and create no revenue while another may cost $100,000 and create millions in revenue. Essentially, R&D can be seen as a gamble for companies because they never know the total outcome of their investment. Additionally, it is very difficult to even put a fair value measurement on the intangible to be capitalized. In order to establish the fair value of the intangibles the third level on the fair value hierarchy would need to be used. This level is the least reliable because the value is determined through assumptions and estimates, which could then result in manipulation....
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- Winter '08