Home / CPA Course / BAR

Research and development costs

BAR Chapter 14 · Area II · Blueprint II.E

R&D is where companies spend on the future, and US GAAP takes a cautious line: most of it is expensed as incurred because its benefits are too uncertain to call an asset. The Blueprint asks you to identify R&D costs, classify them as expense and calculate the R&D expense to report. The skill is knowing what counts as R&D, which costs hide inside it (depreciation, amortization, overhead) and which look like R&D but are not. Helix Biotech, which develops diagnostic tests, gives us a ledger full of tricky items.

In this chapter

1. What counts as research and development
2. Which costs are R&D expense?
3. Calculating R&D expense from the ledger
4. R&D done for others and funded R&D
5. In-process R&D acquired from others
6. Reporting and disclosure

This chapter has 6 lessons, 50 practice MCQs with explanations and 10 simulations, plus flashcards and a recall sheet.

What this chapter covers

• What counts as R&D
• expensing

Chapter 13: Stock compensation · Chapter 15: Business combinations