Accounting Issues For Listed Companies In China R & D Expenditure

As the marketplace becomes more and more competitive, research and development (R&D) activities, as an effective means of strengthening competitive edge, are playing more and more important roles in many firms, especially in high-tech firms. It becomes very crucial to regulate the accounting practice of R&D expense in order to properly reflect a company's financial position and operating results because of the large amount of money spent on R&D activities. Currently, there are hot disputes on which method we should choose among the three possible ones of completely expensing, completely capitalizing and capitalizing R&D investment under certain circumstances.The dissertation consists four parts. In the first part the dissertation summarizes rules and regulations on the accounting treatments of R&D expense in China. Then it penetrates into this kind of accounting method of completely expensing R&D investment and points out the drawbacks of the method. Finally the dissertation indicates that reform is required by the development of capital market on the accounting method of China's R&D expense.In the second part, the dissertation presents three major accounting methods of R&D expense internationally, which are completely expensing, completely capitalizing and capitalizing on certain circumstances the R&D investment. Then it expounds the accounting methods on this issue adopted by International Accounting Standard Committee (IASC), America's Financial Accounting Standard Board (FASB) and British Accounting Standard Board (ASB) in the four procedures of accounting recognition, measurement, recording and reporting. Next, it analyzes the advantages and disadvantages of the three methods and points out that capitalizing on certain circumstance is the best way to reflect a firm's financial position and operating results. Finally, by comparing China's accounting practices of R&D expense with those...