Accounting for research and development costs and goodwill : issues and controversies

Abstract

As technology advances and firms globalise, intangible assets such as research and development costs and goodwill are fast becoming an important category in the financial statements. In the presence of much controversy over the accounting treatments for these two items in most countries, the project attempts to provide an insight into the arguments for and against each alternative treatment as well as a more in-depth understanding of accounting issues revolving round R&D costs and goodwill.

The annual reports for 1994 are reviewed for firms listed on the mainboard of the Stock Exchange of Singapore to investigate into the accounting treatments of R&D costs and goodwill. The results obtained from analyses of the data are that in general, the quantum of the total assets, turnover or equity, representing the size factor has little or no impact on the accounting treatments adopted by the firms for R&D costs and goodwill.