Where to place R&D on a model
In my downtime I am trying to do some modelling, working on a preliminary model for a client we are advising.
I'm going through the financial statements (print outs), building the model from scratch essentially using some of the models on our server as a reference.
The issue, as such, is on the client's financial statements they don't include R&D in Operating Expenses so it is not impacting EBITDA, Net Profit etc. on PnL.
Is this wrong? I BELIEVE I should be putting it in with Operating Expenses. If this is the case, is this company committing fraud?
check to see if they're capitalizing it elsewhere as an asset
How might they be doing that? They mention they deduct it for tax purposes but not when stating profits
they can under certain accounting capitalize D once proven but rarely R (only in software i think) so you'd just see it as an intangible.
okay, then it may be in COGS. unlike D&A which is visible in the cash flow it may be hard to pin it down and they could hide it and aren't required to issue it as a separate line item.
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