Research and development expenses are those which are paid for finding new techniques and methods of producing products and services. It will include expenses for the quality development of products and services. For gaining new knowledge and its application for improvement in the products, we have to pay Innovation cost. This cost will decrease the cost of products and increase the quality of product which is need for market requirements.
For example, few years ago, Gooogle Inc. provided the Google Video Service but it was not sufficient for users' need. So, Google Inc. closed this project and acquired youtube. From the beginning of youtube, you are seeing the changes in this product. We see today youtube due to large high research and development and expenses on this product. Company pays salary to its researchers for new research in this product.
Accounting of Research and Development Expenses
All operating research and development expenses are shown in the debit side of profit and loss account of company. Capital expenditures in the research and development will be shown as investment in the asset side of balance sheet.
For example, few years ago, Gooogle Inc. provided the Google Video Service but it was not sufficient for users' need. So, Google Inc. closed this project and acquired youtube. From the beginning of youtube, you are seeing the changes in this product. We see today youtube due to large high research and development and expenses on this product. Company pays salary to its researchers for new research in this product.
Accounting of Research and Development Expenses
All operating research and development expenses are shown in the debit side of profit and loss account of company. Capital expenditures in the research and development will be shown as investment in the asset side of balance sheet.
