ACCOUNTING CONTROVERSY ON THE RECOGNITION AND EVALUATION OF DEVELOPMENT EXPENDITURE

• Main Author: TULVINSCHI MIHAELA
• Format: Article
• Language: English
• Published: Academica Brâncuşi 2017-12-01
• Series: Analele Universităţii Constantin Brâncuşi din Târgu Jiu : Seria Economie
• Subjects: intangible assets; development expenditure; research expenditure; depreciation; future economic benefits.
• Online Access: http://www.utgjiu.ro/revista/ec/pdf/2017-06/06_Tulvinschi.pdf
• ISSN: 1844-7007; 1844-7007

The development of technology in recent decades has forced the transition from the industrialized society, where the main role was occupied by tangible assets, to an information society, where the essential place is played by intangible assets. These are assets that can not be touched or felt, but are very important to produce wealth and to maintain competitiveness. Within these, development expenditure occupies an important place because it influences the analysis of an entity and its future. The accounting practices applicable to development expenditure are based on theoretical fundamentals and ambiguous typologies. The purpose of the article is to present the controversies about recognizing and evaluating development expenditure. Although development expenditure involves large initial investments, it generates, on medium and long term, significant savings. Depending on the purpose for which it is carried out, research and development expenditure can in time generate identifiable intangible assets but also intangible unidentifiable assets. An optimistic attitude regarding the chances of success of a development project will lead to the capitalization of development expenditure. Capitalizing development expenditures, the usefulness of financial statements is increased, which is generally measured in the ability to explain stock prices through earnings and accounting values.