R & D Converter

This spreadsheet converts R&D expenses from operating to capital expenses. It makes the appropriate adjustments to operating income, net
income, the book value of assets and the book value of equity.
(It can also be used to convert other intangible assets, such as human capital, into capital invested.
Inputs
Current year's numbers
Pre-tax Operating income (EBIT) $3,195.00
Tax rate 40.00%
Net Income $1,025.00
Book value of capital $5,256.00
Capital expenditures $655.00
Depreciation & Amortization $525.00
Over how many years do you want to amortize R&D expenses 5
Enter the current year's R&D expense = 1,594.00 $
Enter R& D expenses for past years: the number of years that you will need to enter will be determined by the amortization period
Do not input numbers in the first column (Year). It will get automatically updated based on the input above.
Year R& D Expenses
-1 1026.00
-2 698.00
-3 399.00
-4 211.00
-5 89.00
0
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R & D Converter
This spreadsheet converts R&D expenses from operating to capital expenses. It makes the appropriate adjustments to operating income, net
Enter R& D expenses for past years: the number of years that you will need to enter will be determined by the amortization period
Output
Year R&D Expense Unamortized portion Amortization this year
Current 1594.00 1.00 1594.00 0.00
-1 1026.00 0.80 820.80 205.20 $
-2 698.00 0.60 418.80 139.60 $
-3 399.00 0.40 159.60 79.80 $
-4 211.00 0.20 42.20 42.20 $
-5 89.00 0.00 0.00 17.80 $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
0 0.00 0.00 0.00 - $
Value of Research Asset = $3,035.40 484.60 $
Expenditure on asset in current year = 1594.00
Amortization of asset for current year = $484.60
Without capitalizing With capitalizing
Operating income 3195 $4,304.40
Operating income after taxes 1917 $3,026.40
Net Income 1025 $2,134.40
Book value of capital 5256 $8,291.40
Return on capital 36.47% 36.50%
Capital expenditures 655 2249.00
Depreciation & Amortization 525 $1,009.60
Industry Name Amortization Period
Advertising 2
Aerospace/Defense 10 Non-technological Service 2 years
Air Transport 10 Retail, Tech Service 3 years
Aluminum 5 Light Manufacturing 5 years
Apparel 3 Heavy Manufacturing 10 years
Auto & Truck 10 Research, with Patenting 10 years
Auto Parts (OEM) 5 Long Gestation Period 10 years
Auto Parts (Replacement) 5
Bank 2
Bank (Canadian) 2
Bank (Foreign) 2
Bank (Midwest) 2
Beverage (Alcoholic) 3
Beverage (Soft Drink) 3
Building Materials 5
Cable TV 10
Canadian Energy 10
Cement & Aggregates 10
Chemical (Basic) 10
Chemical (Diversified) 10
Chemical (Specialty) 10
Coal/Alternate Energy 5
Computer & Peripherals 5
Computer Software & Svcs 3
Copper 5
Diversified Co. 5
Drug 10
Drugstore 3
Educational Services 3
Electric Util. (Central) 10
Electric Utility (East) 10
Electric Utility (West) 10
Electrical Equipment 10
Electronics 5
Entertainment 3
Environmental 5
Financial Services 2
Food Processing 3
Food Wholesalers 3
Foreign Electron/Entertn 5
Foreign Telecom. 10
Furn./Home Furnishings 3
Gold/Silver Mining 5
Grocery 2
Healthcare Info Systems 3
Home Appliance 5
Homebuilding 5
Hotel/Gaming 3
Household Products 3
Industrial Services 3
Insurance (Diversified) 3
Insurance (Life) 3
Insurance (Prop/Casualty) 3
Internet 3
Investment Co. (Domestic) 3
Investment Co. (Foreign) 3
Investment Co. (Income) 3
Machinery 10
Manuf. Housing/Rec Veh 5
Maritime 10
Medical Services 3
Medical Supplies 5
Metal Fabricating 10
Metals & Mining (Div.) 5
Natural Gas (Distrib.) 10
Natural Gas (Diversified) 10
Newspaper 3
Office Equip & Supplies 5
Oilfield Services/Equip. 5
Packaging & Container 5
Paper & Forest Products 10
Petroleum (Integrated) 5
Petroleum (Producing) 5
Precision Instrument 5
Publishing 3
R.E.I.T. 3
Railroad 5
Recreation 5
Restaurant 2
Retail (Special Lines) 2
Retail Building Supply 2
Retail Store 2
Securities Brokerage 2
Semiconductor 5
Semiconductor Cap Equip 5
Shoe 3
Steel (General) 5
Steel (Integrated) 5
Telecom. Equipment 10
Telecom. Services 5
Textile 5
Thrift 2
Tire & Rubber 5
Tobacco 5
Toiletries/Cosmetics 3
Trucking/Transp. Leasing 5
Utility (Foreign) 10
Water Utility 10