Research On The Capitalization Of R&D Expenditure

Since the outbreak of COVID-19 in December 2019,the domestic economy has been hit hard.Although the benefits have decreased,the R&D investment of most enterprises has increased,especially in the pharmaceutical industry.Due to the limitation of external sales,enterprises tend to reduce costs and increase product competitiveness by improving internal management and increasing R&D investment.The state is also vigorously promoting research and development of new technologies and increasing incentives for research and development investment.Based on the above objective factors,how to conduct expenditure management and accounting for R&D investment is a major problem facing many enterprises.The accounting standards of China do not provide detailed standards for the premise conditions of capitalization treatment of R&D expenditure,and enterprises have too much independent decision-making power,which makes the accounting treatment methods of R&D expenditure of current enterprises different.Based on this,it is necessary to standardize the capitalization of enterprise R&D expenditure,which is not only conducive to improving the comparability of enterprise financial data,but also helpful for enterprise management to make business decisions and the majority of investors to make investment decisions.This paper takes the pharmaceutical industry with large R&D investment and obvious growth rate as the research object.Based on the detailed introduction of the basic concept,characteristics and relevant national policies of R&D expenditure,this paper discusses the characteristics of R&D expenditure in the pharmaceutical industry,different pharmaceutical companies or R&D projects.The determination of the time node of R&D expenditure capitalization is briefly expounded.Taking Company D as an example and comparing it with Company F,comprehensively using the case analysis method,literature research method,comparative analysis method and financial ratio analysis method,it is concluded that the excessive capitalization of Company D’s R&D expenditure is caused by the radical accounting treatment,This is caused by three main reasons: the more arbitrary conversion of R&D expenditures to capitalization and the pressure brought by the deterioration of performance.Finally,taking countermeasures against the symptoms,put forward countermeasures and suggestions to accelerate the capitalization of R&D expenditures from the three levels of the country,the industry,and the enterprise itself.Among them,there are certain contents such as clarifying the capitalization distinction standard,adding detailed accounting subjects,and establishing an internal control system.It also has certain reference significance for other industries to strengthen R&D expenditure management.The suggestions in this paper can help pharmaceutical enterprises face up to the problem of R&D investment and play a role in promoting the long-term benefits of r&d expenditure capitalization.