Research and Development (R & D) Costs
Accounting glossary · Understand, connect, apply
Research and development (R&D) costs arise from investigating new knowledge and applying knowledge to new or improved products, processes or systems.
Example
A company incurs laboratory research costs and later develops a product that may meet separate recognition criteria.
Remember the difference
Treatment is framework-specific: IAS 38 expenses research and permits qualifying development capitalization; US GAAP generally expenses R&D with important scope exceptions.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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