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UK Gaap pp 567-585 | Cite as

Research and development

  • Mike Davies
  • Ron Paterson
  • Allister Wilson

Abstract

There are essentially four possible methods of accounting for research and development expenditure. These are as follows:
  1. (a)

    charge all costs to expense when incurred; or

     
  2. (b)

    capitalise all costs when incurred; or

     
  3. (c)

    capitalise costs when incurred providing specified conditions are fulfilled and charge all others to expense; or

     
  4. (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.

Keywords

Development Activity Balance Sheet Development Cost Fixed Asset Future Benefit 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

  1. 1.
    SFAS 2, Accounting for Research and Development Costs, FASB, October 1974, paras. 39–50.Google Scholar
  2. 2.
    Ibid., para. 44.Google Scholar
  3. 3.
    Ibid., para. 50.Google Scholar
  4. 4.
    SSAP 13, Accounting for research and development, Issued December 1977, Revised January 1989, para. 1.Google Scholar
  5. 5.
    Letter dated 15 August 1975 from The Society of British Aerospace Companies Ltd to the Technical Director of ICAEW.Google Scholar
  6. 6.
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  7. 7.
    Original SSAP 13, para. 21.Google Scholar
  8. 8.
    ED 41, Accounting for Research and Development, June 1987, para. 33; Original SSAP 13, para. 28.Google Scholar
  9. 9.
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  10. 10.
    SSAP 13, para. 21.Google Scholar
  11. 11.
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  12. 12.
    Ibid., para. 18.Google Scholar
  13. 13.
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  14. 14.
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  15. 15.
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  16. 16.
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  17. 17.
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  18. 18.
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  20. 20.
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  27. 27.
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  29. 29.
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  30. 30.
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  31. 31.
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  32. 32.
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  33. 33.
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  37. 37.
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  38. 38.
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  42. 42.
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  43. 43.
    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.Google Scholar
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    SFAS 2, para. 8.Google Scholar
  45. 45.
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    Ibid., summary.Google Scholar
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    IAS 9, Accounting for Research and Development Activities, IASC, July 1978, para. 22.Google Scholar
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    E32, Comparability of Financial Statements, January 1989, para. 47.Google Scholar
  54. 54.
    IASC, Statement of Intent: Comparability of Financial Statements, July 1990.Google Scholar
  55. 55.
    Ibid., Appendix 2.Google Scholar
  56. 56.
    E37, paras. 16–22.Google Scholar
  57. 57.
    Ibid., para. 28.Google Scholar

Copyright information

© Ernst & Young 1992

Authors and Affiliations

  • Mike Davies
    • 1
  • Ron Paterson
    • 1
  • Allister Wilson
    • 1
  1. 1.Ernst & YoungUSA

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