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A S – 8
ACCOUNTING FOR RESEARCH
AND
DEVELOPMENT THIS
STANDARD IS WITHDRAWN FROM 01.04.2004
AND AS – 26 INTANGIBLE ASSETS BECAME MANDATORY. So, need not to study but want to know about research and development
just look at below.
Objective: Treatment of
cost of research and development in the financial statements
Definitions:
Research:
Investigation undertaken with the hope of gaining new scientific
or technical knowledge.
Development
:Translation of research findings into a plan or design for the
production of new or substantially improved materials, devices,
products, processes, systems or services, prior to the
commencement of commercial production Cost of
Research and development includes: a. Salaries,
wages & personnel. b. Cost of
material and services consumed. c.
Buildings, equipments and facilities used for R & D. d.
Reasonable allocation of overhead costs.
Treatment and disclosure requirements: Treatment: They should
be charged as an expense of the period in which they are
incurred and can be treated as deferred revenue expenditure. Research and
development costs
once written
off should not be reinstated even though the
uncertainties that had led to their being written off no longer
exist.
Disclosure requirements: a. The total
of research and development costs, including the amortized
portion of deferred costs, charged as expense should be
disclosed in
the profit and loss Account for the period. b. Deferred
research and development expenditure should be separately
disclosed in the Balance Sheet under the head
"Miscellaneous Expenditure." |
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