Calculator · Accounting adjustments
R&D capitalisation calculator
Treat research and development as a capital expense: build the research asset from past R&D, amortise it over its useful life, and restate operating income, invested capital and return on capital.
How R&D capitalisation works
Accounting rules expense most R&D, which understates the invested capital and distorts the margins and returns of research-intensive companies. Following Damodaran, the calculator adds back current R&D, deducts the amortisation of past R&D over the useful life you choose, and adds the unamortised balance to invested capital.
The result is a cost-basis adjustment for comparing returns and margins with Damodaran's R&D-adjusted industry data, not a value of the research. To value technology or other intangibles, use an income-approach method such as MPEEM or relief-from-royalty.
Related: MPEEM calculator · Projection benchmark check · Brand valuation calculator · Model notes
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