# Accounting Change—Program Products

On January 1, 1985, the company changed the method of amortization of program product assets from the straight-line method to a method based on the estimated revenue distribution over the products' revenue-producing lives. This change was applied as of January 1, 1985, to the remaining net book value of the existing assets, as well as to new assets.

In the opinion of management, this change will result in a better matching of costs with revenue because it is reflective of the increasing diversity of product offerings and of their terms and conditions. This change did not have a material effect on 1985 earnings.

## Research, Development and Engineering

Research, development and engineering expenses amounted to $4,723 million in 1985, $4,200 million in 1984, and $3,582 million in 1983. Included in these amounts were expenditures of $3,457 million in 1985, $3,148 million in 1984, and $2,514 million in 1983 for a broad program of research and development covering basic scientific research in a variety of fields and the application of scientific advances to the development of new and improved products and their uses. In addition, expenditures for product-related engineering amounted to $1,266 million in 1985, $1,052 million in 1984, and $1,068 million in 1983.

## Rental Expense and Lease Commitments

Rental expense amounted to $963 million in 1985, $713 million in 1984, and $567 million in 1983. Minimum rental commitments, in millions of dollars, under noncancelable leases for 1986 and thereafter are as follows: $886; $886; $752; $752; $888; $545; $455; $383; $383; $303; and after 1990, $1,293. These leases are principally for the rental of office premises.