Abstract
There are essentially four possible methods of accounting for research and development expenditure. These are as follows:
-
(a)
charge all costs to expense when incurred; or
-
(b)
capitalise all costs when incurred; or
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(c)
capitalise costs when incurred providing specified conditions are fulfilled and charge all others to expense; or
-
(d)
accumulate all costs in a special category distinct from assets and expenses until the existence of future benefits can be determined.
Each of the above is considered in turn.
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References
SFAS 2, Accounting for Research and Development Costs, FASB, October 1974, paras. 39–50.
Ibid., para. 44.
Ibid., para. 50.
SSAP 13, Accounting for research and development, Issued December 1977, Revised January 1989, para. 1.
Letter dated 15 August 1975 from The Society of British Aerospace Companies Ltd to the Technical Director of ICAEW.
Technical Release 264, Statement by the Accounting Standards Committee on the publication of SSAP 13 Accounting for research and development.
Original SSAP 13, para. 21.
ED 41, Accounting for Research and Development, June 1987, para. 33; Original SSAP 13, para. 28.
Ibid., para. 29.
SSAP 13, para. 21.
Ibid., para. 2.
Ibid., para. 18.
Ibid., para. 17.
Ibid., para. 23.
Ibid., para. 16.
Ibid., para. 24.
Ibid., para. 8.
Ibid., para. 9.
Ibid., para. 25.
Ibid., para. 26.
Ibid., para. 27.
Ibid., para. 28.
Ibid., para. 29.
Ibid., para. 30.
Ibid., para. 31.
Ibid., para. 32.
Ibid.
Ibid., para. 22.
L. C. L. Skerratt and D. J. Tonkin (eds), Financial Reporting 1991–92: A Survey of UK Reporting Practice, ICAEW, 1992, p. 247.
CA 85, Sch. 4, para. 3(2).
ED 41, Preface para. 1.5.
CA 85, Sch. 4, para. 20(2).
Ibid., Sch. 7, para. 6(c).
Glaxo Holdings p.l.c., Annual Report and Accounts 1991, pp. 16–18.
Ibid., p. 1.
CA 85, s 263.
Ibid., s 269(1).
Ibid., s 269(2).
SSAP 13, para. 5.
Ibid., para. 6.
Ibid., para. 7.
CA 85, Sch. 4, para. 19(3).
See also, for example, SFAS 7, Accounting and Reporting by Development Stage Enterprises, FASB, June 1975 and SFAS 68, Research and Development Arrangements, FASB, October 1982.
SFAS 2, para. 8.
Ibid., paras. 9 and 10.
Ibid., para. 11.
SFAS 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed, para. 3.
Ibid., summary.
IAS 9, Accounting for Research and Development Activities, IASC, July 1978, para. 22.
Ibid., para. 3.
Ibid., paras. 6 and 15.
Ibid., paras. 16–21.
E32, Comparability of Financial Statements, January 1989, para. 47.
IASC, Statement of Intent: Comparability of Financial Statements, July 1990.
Ibid., Appendix 2.
E37, paras. 16–22.
Ibid., para. 28.
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© 1992 Ernst & Young
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Davies, M., Paterson, R., Wilson, A. (1992). Research and development. In: UK Gaap. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-12998-0_9
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