Wiley GAAP 2019

46ASC 730 RESEARCH AND DEVELOPMENT

PERSPECTIVE AND ISSUES

Subtopics

ASC 730, Research and Development, contains two subtopics:

• ASC 730-10, Overall, which provides guidance on the activities, elements, costs, accounting, and disclosures for research and development
• ASC 730-20, Research and Development Arrangements, which provides guidance on arrangements used to finance research and development

Scope and Scope Exception

ASC 730 applies to all entities and to “activities aimed at developing or significantly improving a product or service (referred to as product) or a process or technique (referred to as process) whether the product or process is intended for sale or use.” (ASC 710-30-15-3)

ASC 730 does not apply to:

• The costs of research and development activities conducted for others under a contractual arrangement
• Indirect costs
• Activities that are unique to entities in the extractive industries
• A process for use in an entity’s selling or administrative activities
• Routine alterations to existing products and processes
• Market research
• Research and development assets acquired in an acquisition by not-for-profit entity or business combination
• Internally developed computer software and costs incurred to purchase or use computer software unless it is intended for use with R&D activities

• (ASC 730-10-15-4 and 5)

Note the following is effective upon implementation of ASU 2014-09, Revenue from Con- tracts with Customers: ASC 730-20 applies to arrangements for software development ...