Research and Development Costs Flashcards
What is NOT included in R&D costs?
Quality control during commercial production, including routine testing
Cost to Obtain Patent
Contract services for another entity are not included.
Development of software for internal use
Marketing research
What are the 5 Categories of R&D?
Materials, equipment, and facilities used in R&D activities
Personnel engaged in R&D activities
Intangibles purchased or developed for use in R&D activities
Contract services acquired and used in conjunction with R&D activities
Indirect costs reasonably allocable to R&D activities
What are some examples Included in R&D costs?
Lab Research New Technology
Design of tools New Technology
Depreciation on equipment with alternative uses is included (Calculate Depreciation)
Amortized Cost to Registering the Patent
Testing in search of product or process alternatives
Development or improvement of techniques and processes
If Materials, Equipment, Facilities and Intangibles purchased/developed and used in R & D have alternative uses - What’s the result?
the cost is capitalized as a tangible or intangible asset and depreciated or amortized.
If no alternative use exists, the expenditure is charged to R&D in the period of acquisition
The following activities typically would be considered research and development within the scope of this Topic (unless conducted for others under a contractual arrangement—see [FASB ASC 730-10-15-4(a)])
Laboratory research aimed at discovery of new knowledge
Searching for applications of new research findings or other knowledge
Conceptual formulation and design of possible product or process alternatives
Testing in search for or evaluation of product or process alternatives
Modification of the formulation or design of a product or process
Design, construction, and testing of pre-production prototypes and models
Design of tools, jigs, molds, and dies involving new technology
Design, construction, and operation of a pilot plant that is not of a scale economically feasible to the enterprise for commercial production
Engineering activity required to advance the design of a product to the point that it meets specific functional and economic requirements and is ready for manufacture
Tools used to facilitate research and development or components of a product or process that are undergoing research and development activities
Cost incurred after commercial production has begun are not research and development costs. What are some examples
Engineering follow-through in an early phase of commercial production
Quality control during commercial production including routine testing of products
Troubleshooting in connection with breakdowns during commercial production
Routine, ongoing efforts to refine, enrich, or otherwise improve upon the qualities of an existing product
Adaptation of an existing capability to a particular requirement or customer’s need as part of a continuing commercial activity
Seasonal or other periodic design changes to existing products
Routine design of tools, jigs, molds, and dies
Activity, including design and construction engineering, related to the construction, relocation, rearrangement, or start-up of facilities or equipment other than (1) pilot plants and (2) facilities or equipment whose sole use is for a particular research and development project
Legal work in connection with patent applications or litigation, and the sale or licensing of patents
What expenditures qualifies for asset capitalization?
Legal costs associated with obtaining a patent on a new product
