CAS 18- R&D cost

Question 1

Definition

Answer 1

Research- Original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding

Development - Application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials,devices, products,process or systems

Question 2

Principles of measurment

Answer 2

1. All costs-Directly tracable- RD activity or can be assigned to RD based on causeeffect or benefits recvd

Question 3

Costs to be included

Answer 3

1. Cost of bought out materials/services- invoice price +taxes and duties- net of credits
2. Salaries, wages and other related cost of personnnel
3. Depn of equipment’s, facilities or other tangible assets and ammortisation of other intangible used in RandD
4. OH cost other than gen admin cost realted to RD
5. Cost charged by other entities
   6, Directly attributed-specific objects
6. Costs-securing copyrights or licenses
7. Costs-designing tools,jugs,moulds and dies
8. Cost of material and services consumed
   10.

Question 4

General Principles

Answer 4

1. Finance cost is not included
2. Abnormal cost is not included
3. Imputed cost is included ( only materials)
4. Depreciation- based on benefit received
5. Credit or recoveries shall be reduced
6. Subsidy, grant or incentives shall be reduced
7. Penalties ,damages, fines paid to stat auth not cost
8. Cost-standard rates- variance is part of cost

Question 5

Assignment of R&D

Answer 5

1. RD related- cost object-assigned directly
2. RD not related-product-not product cost
3. Development cost-creation- intangible-ammortized-useful life-benefits recvd
4. RD-exisiting product or process-improve- COP
5. Development cost-salable service

Question 6

Presentation

Answer 6

1. RD - cost of improving existing product or process- separate cost head-part of COP in cost statement
2. RD - not related to product,service or process is part of Recon or Costing P&L

Question 7

Disclosure

Answer 7

1. Basis of allocation
2. Abnormal cost is excluded
3. Penalties, damages or fines paid to stat authorities
4. Subsidy, grant, incentives recvd is reduced
5. Related party transactions
6. Forex Transactions