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Essay on Financial Reporting for Research and Developing
The paper will discuss the research and development costs with specific relation to their placement in the financial statements. As we have seen that currently all research and development costs are charged to expense when incurred. Recent research suggests that capitalizing R&D costs may be helpful to investors. The organizational growth and development depends on the rapid adoption of new technology as well as new strategies and the acceptance of the fact that these strategies as well as technologies are innovative and creative in nature, which will give numerous benefits and advantages after its implementation.
"Financial reporting standards are accounting pronouncements having the greatest authority" (Financial Reporting Standards).The success of an organization depends on many factors of which one of them is the introduction and acceptance of new strategies. The people of the organization should have a curious attitude and they should always look out for the implementation of new strategies in order to make their lives easier and comfortable. Today, in this modern world of competition developments and innovations are bound to take place in order to meet the standards and requirements of the other developing countries, those countries and nation can survive who would develop the power to adapt the technological innovation and who would make use of the latest tools and strategies which are introduced while on the other hand a delay in the adoption of these innovations and strategies would lead that country towards disaster and failures.
Therefore,the question is should financial reports contain additional info (historical & forward looking) on R&D projects and if so, what is that info and how should it be presented? The rule of financial statement is that "All cost elements, including labor costs, material costs, allocations of depreciation and other overhead costs, that are consumed for research and development activities should be included in research and development costs" (Accounting Standards for Research and Development Costs)...........
