Accounting Perspectives of R&D Spending – Revenue Expenditure or Capital Expenditure Syndrome

Abstract

Research & Development is an effort made by a company in innovation, introduction, and improvement of products or service. There are constraints in recording R&D expenditure as an asset because the future benefits from this expenditure are uncertain but one exception to this is that when a company buys another company, then the R&D expenditure should be capitalized. R&D accounting around the globe is still a controversial issue because the estimation of R&D projects earning power is ineffectual. The policymakers of the country have a significant interest in the money spent on R&D to understand the economic growth of the country. In India, the (GERD) Gross Expenditure on Research & Development has tripled in a decade. The present study is based on literature review and intends to provide an insight into the accounting practices of R&D and its spending by India.

Keywords: R & D Accounting, Accounting Standards, R & D Expenses