Perspective and Issues
Definitions of Terms
Concepts, Rules, and Examples
Overview of Research and Development Costs
Acquired Research and Development Costs
Nonrefundable advance payments related to future R&D activities
Sponsored research and development activities
Accounting Standards Codification (ASC) 730, Research and Development, addresses the proper accounting and reporting for research and development costs. It identifies those activities that are to be identified as research and development, the elements of costs that shall be identified with research and development activities, the accounting for these costs, and the financial statement disclosures related to them.
The central issue in regard to research and development costs is that the future benefits related to these expenditures are uncertain. Given this uncertainty, it is generally difficult to justify classifying them as an asset. Generally, you should charge them to expense as incurred.
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Probable. An event is likely to occur.
Related parties. Related parties can include affiliates of an entity, trusts for the benefit of employees, owners, and managers of an entity, and other parties having significant control over the operating policies of an entity.
Research and ...