Why are intangibles like R&D and advertising not deducted as an expense on the defensive income statement?
1. Use of cash2. No assurance the investments will generate higher future sales and/or cost savings. To wit: Xerox!Hewitt
But that seems like you should deduct intangibles, I mean, deduct them from revenue. I guess the reason you didn't deduct them in the Wrigley's example is that they are already included in cost of sales? The company I am working on breaks out R&D as a seperate item, so I deduct that on the defensive statement, and then after I depreciate it, I deduct it again on the enterprising statement. I think this is right?Thanks for your help, Mr Heiserman.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |