The difference between capitalization and expensization of expenses in Hengrui Pharma.

hengrui expensing: all R&D investment is expensing, which means that all expenses incurred by enterprises in the process of project research and development are recorded in the current cost. Deduct directly from the current income. The reason for adopting this method is that enterprises believe that the economic benefits brought by R&D achievements in the future are uncertain. Therefore, the principle of prudence is adopted and the cost is included. In addition, it reduces the profits of enterprises and can also reduce the tax payment of enterprises. This method is simple and avoids the problems caused by financial personnel.

capitalization of hengrui: domestic listed pharmaceutical companies have not found such an extreme situation. This situation can be similar to merger and acquisition, where a company is purchased and merged into the goodwill part, and all the R&D investment is capitalized. Once this part of capitalized assets fails to meet expectations, it will be amortized from the profits. This method is also based on the fact that research and development activities will inevitably produce some intangible assets, such as patents and proprietary technologies. These can increase the overall value of the enterprise, so they can be used as assets. Capitalization also conforms to the accrual principle, and can even eliminate the short-term behavior of the enterprise to a certain extent. However, if it is capitalized indiscriminately, it does not conform to the principle of conservatism.

1. jiangsu hengrui Pharmaceutical Co., Ltd. was established in 197. The company, formerly known as Lianyungang Pharmaceutical Factory, is a large-scale listed pharmaceutical enterprise integrating scientific research, production and sales. The company is headquartered in Lianyungang City, Jiangsu Province. On September 1th, 22, the list of the top 5 private enterprises in China was released. Jiangsu hengrui Pharmaceutical Co., Ltd. ranked 424th with an operating income of 232.857 million yuan. In July 221, Fortune China 5 was released. In 221, jiangsu hengrui Pharmaceutical Co., Ltd. ranked 373rd.

2. The company has been successively rated as "Advanced Collective of National Pharmaceutical System", "National Key High-tech Enterprise", "National Torch Plan New Drug R&D Industrialization Base" and "National 863 Plan Achievement Industrialization Base", and has been listed as one of the top ten enterprises in the national chemical and pharmaceutical industries by the National Bureau of Statistics for many years. It is the national "major new drug creation" special innovative drug cultivation base. In 21, it was awarded as the lead unit of "Industry-University-Research Alliance for Technological Innovation of Antitumor Drugs in China" by the Ministry of Science and Technology; In 21, the company ranked first among the top 2 most competitive pharmaceutical listed companies in the world. In the same year, the company was rated as the "Best R&D Product Line in China" by China Pharmaceutical Industry Information Center.

3. The company has paid taxes for many years, ranking second in the national chemical and pharmaceutical industries, and has been rated as the first taxpayer of industrial enterprises in Jiangsu Province for many years. In 21, the company achieved sales revenue of 3.75 billion yuan and profit and tax of 1.5 billion yuan, and various economic indicators were significantly improved compared with the same period in 29. In 211, the National Targeted Drug Engineering Technology Research Center established by the company became the first national engineering technology center established by a pharmaceutical company in Jiangsu Province. The company has been paying taxes for many years, ranking second in the national chemical and pharmaceutical industries, and has been rated as the first taxpayer of industrial enterprises in Jiangsu Province for many years. In 211, the sales revenue was 4.55 billion yuan and the profits and taxes were 1.8 billion yuan.