Replies to post #401147 on InterDigital Inc (IDCC)

[FISH21049]

m3s, No, I can't show where Microsoft withheld money from Nokia but the way I look at it is this:

Let,s assume that they gave NOKIA a check for $6 billion. Let's also assume that they assumed the contingent liability of $1 billion.

Then, the total they booked as a purchased asset was $7 billion. The entries (simply speaking) were as follows:

$7 billion -- Debit to Increase Assets for purchase of Nokia
$6 billion -- Credit to Decrease cash paid to Nokia
$1 billion -- Credit to Increase Contingent liabilities

The 'credit' to contingent liabilities is ONLY IF MICROSOFT actually acknowledged the possibility of a loss and money would be owed to InterDigital and would have booked some entry for a contingent liability (as was done by Nokia on their financials).

Otherwise, IF Microsoft did NOT record any liability for possibile contingent loss, then IF THE CASE GOES IN FAVOR OF INTERDIGITAL, then Microsoft would have to Debit Expense and Credit Cash (payment to Interdigital) for the amount of the loss.

The entries are more complex than those I show but the jist of it is that IF THERE IS A CONTINGENT LIABILITY, then Microsoft would/should have booked some liability on its books. That liability might be 'included' in any goodwill or premium paid for the purchase.

JMO from what I recall or think what may have occurred.