Accounting Standards For Research And Development

Accounting Standards For Research And Development

Introduction:
This report offers a blueprint for the effects of the development and implementation of accounting standards for research and development (R&D) expenditure. It contains practical and suitable recommendations for the successful development and implementation according to the economic, regional and social set-up of country. The development of accounting standards will enable sustainable growth and competitiveness in an economy and its contribution to regional and universal prosperity.

It can be seen that intangible assets fall into two categories, one is bought from a third party and the others are created internally. The treatment of purchased intangibles for accounting purposes is relatively simple in that the purchase price is capitalized in an identical way as for a tangible asset. The second type is somewhat more problematical. R&D costs come under the internally-generated heading, and are hence subject to strictures under both UK and international standards that require specific recognition. Nowadays, the activities of Research and development (R&D) have become an essential part of an enterprise’s expenditure and with this in mind it will be difficult for the RASB to reach a conclusive decision because of the considerable variances among countries in terms of its treatment. In the following paragraphs I will discuss the problems relating to accounting for Research and Development together with the appropriate accounting concepts that should be applied when dealing with these problems.(CPAjornials, http://www.nysscpa.org/cpajournal/2003/0903/dept/d095003.htm)
The researchers are expecting that the implementation of these initiatives and recommendations will lead to fair and transparent accounting practices in the country.

Research and Development’s problems:
The key discussion in the accounting treatment of R&D costs centres on their timing and recognition. Supporters of the accrual principle point out that the costs...