This excerpt taken from the MDT 8-K filed Jan 18, 2008.
In-process research and development
The values assigned to IPR&D are based on valuations that have been prepared using methodologies and valuation techniques consistent with those used by independent appraisers. The value assigned to IPR&D is based on a preliminary valuation and is subject to further review by management. All values were determined by identifying research projects in areas for which technological feasibility had not been established. Additionally, the values were determined by estimating the amount of after-tax cash flows attributable to these projects. The future cash flows were discounted to present value utilizing an appropriate risk-adjusted rate of return. The rate of return included a factor that takes into account the uncertainty surrounding the successful development of the IPR&D. Using this approach, the Company determined that $290 million of the purchase price represents purchased in-process technology. Due to its non-recurring nature, the IPR&D expense has been excluded from the unaudited pro forma combined condensed statements of operations. The IPR&D costs will be expensed in Medtronics consolidated financial statements in the third quarter of fiscal year 2008.