NOTE 19 - AMORTIZATION OF FUTURE DEVELOPMENT COSTS

Future Development Costs refer to costs that are expected to be spent in researching and developing future products. Below provides a listing of the Company's budgeted R&D.

J&B has decided to amortize these costs, equally over the estimated useful life of future products. That is over a four year period. In other words, J&B is assuming that all future products will have a life cycle of four years; after which time, the product is assumed to be removed from the Company's product line. As a result, the forecasted income statements show the following amortization of the future research & development costs. (Please Note: generally a company would expense these costs and expenses as they are incurred; that is, they would not be amortized)

On the Company's forecasted balance sheet an account called Net Intangible - (Future R&D) can be viewed. This account uses amortization expenses to estimate the current market value of the Future R&D . Below depicts the calculations used in determining the Net Intangible (Future R&D) account balances.

It is important to recognize that the Company's forecasted financial statements provide a budget for future research and development costs without actually allowing for any sales of future products. This gives the statements more credibility and increases management's objectivity.