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I am analyzing an ODM TECHNOLOGY company and trying to build an integrated projection. From reviewing its financial reports, it has, say, $8m of R&D expenses on the income statement and $12m of investment cash outflow of Product Development; it also has an intangible asset account for Product Development. I tried to dig more from the footnotes but was NOT helpful. So based on the stated R&D expenses and the Product development cash out flow and the existing intangible asset accout of Product Development, does it mean that the company actually spent (cash outflow) of $12m for R&D (Product Development), out of this amount, the company expensed $8m immediately in the income statement and capitalized $4m on the balance sheet to be amortized?
If yes, then, in making the projection, do we allocate the total cash out spending on R&D from the cash flow statement to expenses on the income statement and capitalize the rest on the balance sheet to be amortized? Many thanks. Read More