Acca financial Accounting (FA) Study Text ac ca (FA)

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Research and development 

IAS 38 contains specific requirements relating to accounting for research and 

development activities. First, it is necessary to understand the definition of 

research expenditure and development costs before their respective accounting 

treatment is considered. 

IAS 38 defines research as 

'original and planned investigation undertaken 

with the prospect of gaining new scientific or technical knowledge and 

understanding'

 (IAS 38, para 8). 

Development is defined as 

'the application of research findings or other 

knowledge to a plan or design for the production of new or substantially 

improved materials, devices, products, processes, systems or services 

before the start of commercial production or use'

 (IAS 38, para 8).