Investments in Research and Development (R & D) : Accounting Methods and Impact on Financial Results of Companies

• Autorzy: Sirle Kasendi
• Języki publikacji: EN

Abstrakty

EN

The existence of a strong association between R & D expenditures and subsequent benefits is no longer in doubt. Several empirical studies have proved significant correlation between business R & D expenditures and subsequent benefits, in form of earnings and shareholder value, even correlation between R & D expenditures and productivity. Raising competition, increasing dependence of companies on technology for competitive advantage, finding investors are causing managers to seek suitable methods to report R & D expenditures the way that enables better performance of firms' balance sheets. The present article focuses on main problems associated with choice between capitalization or expensing R & D expenditures and possibilities, which are placed in IAS. There are several reporting methods, which cause different results in the performance of companies' financial results. Treating development expenses as operating expenses and fully expensing these costs in income statement makes taxable profit lower. In other words tax liabilities are postponed to future periods when R & D projects start to earn benefits. The other method is treating development expenditures as tax-deductible capital expenditures for purposes of valuation and making financial statements more attractive to investors. This can have significant effects on operating income, investments' profitability and expected growth measures for firms with substantial research expenses. The choice between capitalization and expensing is easier in those countries where corporate income tax rate is low or even zero, for example in Estonia. There is no need to pay attention to tax optimization with expensing development costs. In countries with high corporate income tax, companies must choose development costs reporting method the way it optimizes their tax liabilities or raises attractiveness of financial statements with increasing book values and profitability measures. Choosing between these two opportunities, it is also needed to consider the criteria's of intangible asset (LAS 38). (original abstract)

Korzyści płynące z inwestowania w obszar B&R (Badania i Rozwój) nie pozostawiają żadnych wątpliwości co do słuszności wydatków w tej sferze. W artykule skupiono się na problemach związanych z wyborem typu kapitalizacja lub wydatkowanie środków przeznaczanych na B&R. Jest kilka metod księgowania, których odpowiednie użycie może zdecydowanie zmienić wyniki finansowe związane z działalnością przedsiębiorstwa. Decyzje dotyczące wspomnianego wyboru są łatwiejsze i skłaniają się ku kapitalizacji w przypadku krajów o niskiej lub zerowej stopie podatku dochodowego od osób prawnych, np. Estonii. Tam gdzie podatki są wysokie przedsiębiorstwa uciekają się do metod optymalizacji zobowiązań podatkowych. (JW)

Słowa kluczowe

EN

R&D in the enterprise; Accounting in enterprise

PL

Sfera B+R w przedsiębiorstwie; Rachunkowość w przedsiębiorstwie

• Czasopismo: Prace Naukowe Akademii Ekonomicznej we Wrocławiu
• Rocznik: 2002
• Numer: nr 961 Inwestycje w rachunkowości
• Strony: 175--180

Twórcy

autor

Sirle Kasendi

Bibliografia

• Damodaran A., 1996, Research and Development Expenses: Implications for Profitability Measurement and Valuation, Stern School of Business, New York, p. 1-25.
• Deng Z., Lev B., 1998, The Valuation of Acquired R & D, Leonard N. Stern School of Business, New York University, p 1-35.
• Healey M.P., Myers C.S., Howe C.D., 1999, R & D Accounting and the Tradeoff Between Relevance and Objectivity. Harvard Business School, p. 1-45.
• Kothari S.P., Laguerre T.E., Leone A.J., 1998, Capitalization versus Expensing: Evidence on the Uncertainty of Future Earnings from Current Investments in PP & D versus R & D, University of Rochester, p. 1-31.
• Lev B., Zarowin P., 1998, The Market Valuation of R & D Expenditures, Leonard N. Stern School of Business, New York University, p. 1-39.
• Lev B., Sarath B., Sougiannis T., 1999, R & D Reporting Biases and their Consequences, New York University, p. 1-48.
• Organization for Economic Co-operation and Development, 2001, R & D and Productivity growth: Panel Data Analysis of 16 OECD countries. - CTI working papers, p. 1-25.
• International Accounting Standards (IAS) 2001, International Accounting Standards Committee, London.