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    U.S. GAAP rules related to R&D

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    Question:

    Do you think that U.S. GAAP puts American R&D-intensive companies at a disadvantage to their global competitors? Specifically, are the U.S. GAAP rules related to R&D logical compared to IFRS and do you believe that investors can interpret the U.S. GAAP and IFRS R&D information appropriately?

    Finally, if you were the Controller (Chief Accounting Officer) for a New Jersey-based biotechnology company, would you prefer to use IFRS or U.S. GAAP for your R&D disclosures? Or does the choice not matter at all?

    We first list the R&D accounting under US GAAP and under IFRS. Under US GAAP, under FAS 2, all expenditure relating to R&D such as (1) costs of materials, equipment and facilities that have no alternative future uses; (2) salaries, wages and other related costs of personnel engaged in R & D activities; (3) purchased intangibles that have no alternative future uses; (4) contract services; and (5) a reasonable allocation of indirect costs, except for general and administrative costs, which must be clearly related ...

    Solution Summary

    U.S. GAAP rules related to R&D are fully debated in this solution.

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