Research On Capitalization Of R&D Expenditure Of Chinese Pharmaceutical Enterprises

With the rapid development of the world economy aand technology,enterprises must intensify their research and development activities in order to maintain their core competitiveness.It is especially true for pharmaceutical companies with high-tech products.However,this measure has brought about a surge in research and development expenditure,which has affected corporate efficiency and national tax revenue become the focus of the accounting community.Taking HaiZheng pharmaceutical company as an example,this paper studies the capitalization of its r&d expenses and the choice of expensing policies,as well as the impact on corporate profits and national tax revenue,and further discusses how to optimize and scientize relevant national regulations.The data of r & d expenditure and various financial indicators released by HaiZheng pharmaceutical company in2014 annual report were normal.Based on the data of r&d expenditure and various financial indicators published in the 2014 annual report of the company,the net profit,r&d expense value and capitalization rate of r&d expense of the company in the years after 2015 were investigated.it was found that the net profit value decreased year by year and the capitalization rate of r&d expense was much higher than that in the same industry.By reducing the capitalization rate of research and development expenses and adjusting or reducing the calculation,if the capitalization rate of research and development expenses of the enterprise is reduced to the general level of the same industry in China after 2016,the net profit of the enterprise will present a more dramatic annual further cliff type decline.It can be seen that in order to improve the performance of financial statements,HaiZheng pharmaceutical has adopted the method of over-capitalization of research and development expenses for several consecutive years.This is reflected in the capitalization of r&d expenditure on generic drugs before the approval of clinical trials.This extreme approach to r&d spending has caused serious consequences for companies to whitewash their financial statements.In order to study,the paper firstly combed the domestic and foreign literature related to r&d expenditure accounting treatment,arranging the r&d expenditure accounting policy development and enterprise in the research and development expenditure accounting policy choice have four motives,such as income smoothing motivation motivation,political cost,debt contract motive,preferential tax incentives,etc.In order to find out the basis of enterprises' choice of accounting policies and the financial consequences of their treatment of r&d expenditure,this paper takes HaiZheng pharmaceutical company as the research object and conducts a detailed study in various aspects.The case study shows that the excessive capitalization of r &d expenses of Haizheng pharmaceutical company not only reduces the cost expenditure in the current period,but also increases the intensity of enterprises' utilization of tax incentives.On the whole,it achieves the purpose of avoiding losses and whitewashing the performance of enterprise statements.The reason for this phenomenon is that China has adopted a conditional capitalization model for r&d expenditure.This model in the absence of a monitoring system and unified criteria for the enterprise left more room to adjust the surplus.In this regard,this paper suggests that in order to making the treatment of enterprise r&d costs more scientific and standardized,the relevant regulatory departments should make more clear and detailed legal provisions on the conditions of the capitalization or expensing of enterprise r&d costs.At the same time,we should strengthen the construction of enterprise financial accounting personnel,improving their moral and professional quality and strengthening the supervision of enterprise information disclosure.