Describe how Cisco accounts for expenditures for research and development (R&D) costs (guided by

ASC 730) that it incurs.

i. Complete the following table relating to R&D expenses reported by Cisco

	2013	2012	2011
Total R&D expense	5,942	5,488	5,823
Total R&D expense / Total revenues	5942/48607=12.22%	5488/46061=11.91%	5823/43218=13.47%
Total R&D expense / Total operating expense	5942/18244=32.57%	5488/18144=30.25%	5823/18862=30.87%

ii. Comment on the trends in the R&D expense in dollars and related ratios in the table above.

Does Cisco appear to be maintaining, increasing or decreasing its investment in R&D activity

over this period?

iii. In following generally accepted accounting principles, Ciscos balance sheet does not include

an intangible asset for the value created by internally-generated research and development

costs. Describe how investors might use the information in the previous table to gain insights

about changes in the value of Ciscos technology and other value that might be created by

investments in research and development activities.