Do R&D expenses belong to the period expenses?

In accounting standards, research and development expenses are usually considered as a kind of period expenses. This means that R&D expenses should be included in the income statement immediately when incurred, not in the balance sheet. This is because R&D activities are usually related to a specific accounting period, and the results cannot be clearly attributed to future economic interests.

However, in some cases, R&D expenses can also be capitalized as assets and later included in the income statement through amortization or impairment. This usually happens when the R&D project has clear economic benefits, foreseeable future benefits and reliable cost estimation.

In terms of taxation, the treatment of R&D expenses is also different. Many countries allow R&D expenses as deductible pre-tax costs to reduce the income tax burden of enterprises. This means that enterprises can consider R&D expenses when calculating income tax and get corresponding tax incentives.

In short, whether R&D expenses belong to period expenses depends on specific accounting standards and tax laws. In practice, enterprises should reasonably handle and classify R&D expenses according to the requirements of relevant laws and regulations and combined with specific conditions. Advice When detailed guidance is needed, consult a professional accountant or tax consultant to obtain accurate information and advice.

The accounting treatment of R&D expenses and its influence refers to how to record and report R&D expenses in financial statements, and analyze its influence on the financial situation and operating performance of enterprises. Generally speaking, R&D expenses can be accounted in two ways: capitalization and expensiveness. Capitalization means that R&D expenses are capitalized as long-term assets and distributed to multiple accounting periods, thus affecting the balance sheet and income statement of an enterprise. Expensive means that R&D expenses are directly charged as period expenses in the current period, which has a direct impact on the current income statement.

The accounting treatment of R&D expenses will have different effects on the financial situation and operating performance of enterprises. Capitalization can reduce current expenses and increase current profits, but it will increase the long-term liabilities and asset scale of enterprises. You will increase the current expenses and reduce the current profits, but it can truly reflect the operating costs and profitability of enterprises. Choosing an appropriate accounting treatment method needs to comprehensively consider the financial strategy, industry characteristics and regulatory requirements of the enterprise.

Therefore, the accounting treatment of R&D expenses and its influence are of great significance to the financial report and decision-making of enterprises, and it is necessary to make reasonable choices according to the specific conditions of enterprises under the premise of observing accounting standards.

Legal basis:

People's Republic of China (PRC) patent law (revised in 2020);

Chapter VII Protection of Patent Right Article 74 The limitation of action for infringement of patent right is three years, counting from the date when the patentee or interested party knows or should know about the infringement and infringer. If the patentee fails to pay an appropriate royalty before the patent right is granted after the publication of the application for a patent for invention, the limitation period for requesting the royalty is three years, counting from the date when the patentee knows or should know that others are using his invention. However, if the patentee knows or should know before the patent right is granted, it shall be counted from the date when the patent right is granted.