You’re a traditional car company and you have 100M in sales each year. The COGS and G and A total up to $50M. You are also spending $7M this year to develop a solar-powered car.
Would your operating revenue be 100-50=50?
Or would it be 100-50-7=43?
Or would your answer depend on it being GAAP vs IFRS?
Under IFRS, research is expensed and development is capitalized. So depending of the level of progress, they could show less income. But eventually the income sheet will show the expense through depreciation of the capitalized asset.
Under GAAP, R&D all expensed as incurred.
It’s also important to understand the cash flow effects. If expensed, CFO will be lower. If capitalized, CFI will be lower.