R&D expenses are also known as research and development cost expenditures. China's accounting and tax regulations are not fully consistent with the International Accounting Standards (IAS) on what is included in R&D expenses. The Accounting Standards Board (ASB) does not specify what is included in R&D expenses, but it does specify the period in which R&D expenses are to be recognized.
International Accounting Standard 9 - Research and Development Costs, developed by the International Accounting Standards Board, on the other hand, stipulates that the costs of research and development activities include the following:
1. Salaries, wages, and other personnel costs.
2. Cost of materials and consumed labor.
3. Depreciation of equipment and facilities.
4. Proper allocation of manufacturing costs.
5. other costs.
Expanded:
China's accounting standard treatment of research and development (R&D) expenses is divided into two major parts:
One is the research expenses incurred in the research stage and expenses that cannot be distinguished between research stage R&D expenditures and development stage R&D are fully expensed.
The second is that expenses incurred in the development phase of an internal research and development project, which can be shown to qualify as an intangible asset, are capitalized and amortized over time.
As mentioned earlier, the People's Republic of China **** and the State Enterprise Income Tax Law on research and development costs require two separate cases, "enterprises for the development of new technologies, new products, new processes incurred research and development costs.
Not formed intangible assets included in current profit and loss, in accordance with the provisions of the actual deduction basis, in accordance with the research and development costs of 50% additional deduction; the formation of intangible assets, in accordance with the cost of intangible assets, amortized at 150%".
See, in the treatment of research expenses, China's practice accounting treatment and tax deduction provisions are not consistent. IAS 9 - Research and Development Costs, developed by the International Accounting Standards Board (IASB), states that "the amount of the cost of research and development activities should be recorded as an expense in the period in which it is incurred, except to the extent that development costs are deferred in Section 17."
Section 17 states that "the development costs of a project may be deferred to future periods if the following criteria are met:
1. The product or process method is clearly described and the costs attributable to the product or process method can be separately identified.
2. The technical feasibility of the product or process has been demonstrated.
3. The management of the enterprise has expressed its intention to produce, sell in the market or use the product or process method.
4. There is a clear indication of a future market for the product or process method, or its utility to the enterprise can be demonstrated by using it internally rather than selling it.
5, the existence of sufficient resources, as well as the completion of the project and sell the product or process method in the market". Can be seen, the International Accounting Standards Board's "International Accounting Standard No. 9 - Research and Development Costs" for the treatment of research and development costs and China's accounting standards for the treatment of research and development costs are basically the same, but different from China's tax law.
Baidu Encyclopedia - Research and Development Expenses