Question

What do you think about R&D being deducted from revenue? (hint: think about accounting, how do accountants try to match expenses with revenue?

Does the deduction of R&D adhere to the general rule of matching expenses and revenue)?

Answer 1

• Research and Development is a process or a method through which a company can improve , redifine its existing product and devevlop a new product or a process or a design.

How do accountants try to match expenses with revenue.

• It is very debatable topics that whether research and development cost should be capitalised or recorded as expenses in the book of account.
• According to Generally accepted accounting principle ( GAAP) expences on research and development work should be recorded as expenses in income statement of the company in the same the accounting year.
• According to International Financial Reporting Standards (IFRS) expences on research and development work should be recorded as expenses in income statement of the company in the same the accounting year. but under IFRS company can capitalise the cost of research and development if thay can prove that it can generate economic benefit in future by selling it or by using it.