R & D accounting



If a company is strictly R & D is anything expensed? Or is everything just
capitalized as the cost of developing a product? Thank you in advance and
please reply to the group as this address is a spam catcher.




Janice Davis

According to my text book, R&D can immediately recognize expenses in the
hope of developing a product.

Immediate Recognition: Period costs cannot be attached to revenues or see
future benefits




Mark Shamber

If a company is strictly R&D, it depends on whether these costs are to
develop your initial product, new products or if you contract out to perform
R&D for others.

If it's for an initial product, it's all expensed and you're considered a
development stage company (SFAS 7).

If it's for a new product, it still gets expensed until you develop a
working product.

For contract work, it depends on how you bill the R&D work you perform.

For biotechs, the rules can vary.

Mark Shamber, CPA

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