Handbooks | August 2022

Insight

Handbook: Research and development

Our in-depth guide to accounting for R&D costs and R&D funding arrangements.

Nick Burgmeier

Nick Burgmeier

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5455

Kimberly Spencer

Kimberly Spencer

Senior Manager, Dept. of Professional Practice, KPMG US

+1 203-406-8184


Using Q&As and examples, KPMG provides interpretive guidance on research and development costs and funding arrangements.

Applicability

  • All companies engaged in R&D activities

Relevant dates

  • Effective immediately

The many connections of R&D accounting

US GAAP covers two distinct areas of accounting related to R&D: how to account for costs an entity incurs in its R&D activities, and how parties to an R&D funding arrangement account for that arrangement.

The FASB’s guidance has been around a long time – the guidance on R&D costs dates back to 1974 and FASB Statement No. 2, while the guidance on R&D funding arrangements dates back to 1982. Since then, the guidance has remained largely – although not entirely – unchanged.

As businesses look for new ways to innovate and finance their R&D activities, application questions continue to emerge. Our objective with this publication is to help you make the judgments associated with these application issues. We start with the basics of R&D accounting and expand to provide insights, examples and perspectives based on our years of experience in this area.

There are many connections to other accounting topics, and we identify common issues that will require you to consult our handbooks on other Topics, such as business combinations, consolidation, software and website costs, debt and equity financing, and derivatives and hedging.

Viewed from that angle, this one resource provides you with a roadmap to resolving the many varied issues that can arise with R&D activities.

Report contents

  • R&D costs
  • R&D funding arrangements
     


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