What is Research and development costs?
In short
Research and development costs, such as salaries, materials and overhead for discovering new knowledge or turning it into products, are expensed as incurred under US Generally Accepted Accounting Principles (GAAP).
Key takeaways
- Equipment and materials with alternative future uses are capitalized and depreciated, with the depreciation charged to research and development.
- Costs of developing software for sale are capitalized after technological feasibility is established.
- In-process research and development acquired in a business combination is capitalized as an indefinite-lived asset.
Where it's tested
FAR: Intangible Assets & Goodwill — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under US GAAP, internally generated research and development costs are: