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Hello Mr.Mike
Hope you are fine.Would you please let me how we should deal with cash payment for research cost or markting cost in the cashflow statement?
I know the cash payment for development cost is shown in the ”Investing Activities” section. But what about cash which is paid for research cost or marketing cost?
As far as I have understood, these types of cost are NOT shown in the cashflow! If this is true, then the questions is WHY we do not show them?! The company has paid cash for them!!Thank you in advance 😉
Kind RegardsWhy on Earth would you think that they are not included within the cash flow? Because they are not separately identifiable from within the profit before tax figure! That is, they are (or should be) included as an expense within the statement of profit or loss and they’re not added back as non-cash.
Whe exactly do you want to show them?
Thank you dear Mike.
What I get from your reply is that :
– These cost have already reduced profit before tax AND
– Also because there is NO need to show them SEPERATELY, so there is no need to add back them too!Ok …. ish
They are not an item that needs to be added back – that’s why we don’t add them back!
Depreciation is often not shown separately within the statement of profit or loss (in real life, it won’t be shown separately. It will be included within an appropriate section – operating expenses, administrative expenses or distribution costs)
The value of depreciation IS shown withing the notes to the financial statements so that information IS available and is appropriately added back as a non-cash item
Ok?
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