Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Version: 28 March 1994
Length: 27 pages
Data source: Published sources
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Abstract
Sierra On-Line, a fast growing software developer, is criticized by a Forbes journalist for excessively capitalizing software development costs. In contrast to most other software developers that typically capitalize about 20% of R&D costs, Sierra capitalizes 80%. Questions investors must address in valuing Sierra include: Does Sierra's account reflect economic reality? Is their accounting too aggressive or are their competitors too conservative? Is Sierra's business sufficiently different from its competitors to invalidate the comparison?
Location:
Industry:
Size:
USD43 million revenues; 527 employees
Other setting(s):
1992
Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Length: 17 pages
About
Abstract
Sierra On-Line, a fast growing software developer, is criticized by a Forbes journalist for excessively capitalizing software development costs. In contrast to most other software developers that typically capitalize about 20% of R&D costs, Sierra capitalizes 80%. Questions investors must address in valuing Sierra include: Does Sierra's account reflect economic reality? Is their accounting too aggressive or are their competitors too conservative? Is Sierra's business sufficiently different from its competitors to invalidate the comparison?
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Location:
Industry:
Size:
USD43 million revenues; 527 employees
Other setting(s):
1992
Related
Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Length: 17 pages