We should take into account whether it has those expenses or not, whether the company has a research line, whether new products are being created or designed, etc. Furthermore, it has to clear grounds of the potential technical success and of the economic-commercial profitability of the project or projects that are been managing. Cannot link expenses to an unprofitable or fictional project because of the fact that reducing the expenditure account of the company. Otherwise it will has to be justified as a losses in a future and you could incur an administrative penalty.
The first thing we should do is identify the intangible asset accounts which match with the expenses we want to assign R+D:
- Research (200)
- Development (201)
- industrial property (203)
The account number is assigned by logic: First research is done, later it is carried out and finally, as a result of it, we get an industrial property, for example: patent.
Afterwards, we analyse the expenses that we have and we decide which of those are clearly associated with a research/innovation line that we are carrying out like an investigation, development or patent process.
The expenses that we can associate with can be different types:
- 60_ purchase accounts of different types but associated with that project.
- Cash and Banc 570 y 572 if we pay patent rights or the cost of their process.
- Personnel costs 64_ account in proportion to the associated time with that project. In other words, if an engineer dedicates 50% of his time to develop a new product, this time can be associated with the value of the product. If he receives of Wages and Salary 4000€ per year, 2000€ could be put in the Develop Account (201).
- Independent Services 623 necessaries to develop it.
All of these accounts are regularized by the end of the year. Meanwhile, we will make accounting entries in the same way as we have done before. The only difference is that the related bills to the different projects have to be localized, as the expenses we want to derived. Let see some examples:
Year 2016, Z Project: Throughout the year 2016 we have associated the project with independent Raw Materials expenses, Personnel and Services. Introduce it as a count in only one account, there will be the needed accounts.
|10000 64_ Personnel Expense|
|2000 623 Independent Services|
|20000 601 Raw Material Purchasing to||572 Banks 30000|
|410 Creditors for services 2000|
At the end of the year 2016: we create the Incomes Account 730 Works flows done for Intangible assets in order to compensate those cost and to generate the new asset accounts:
|32000 200 Research to||730 Works flows done for Intangible assets 32000|
In this way, we have compensated the costs by an incomes and, at the same time, we have created an asset account. Doing so, a value of the company is increased and the expense account is reduced to the year in course.
With these Research and Developments two things could happen:
- The project ends successfully and it becomes to an industrial property (patent…). With it we should create a new account and associate it with, for example, management patent cost.
|34000 203 Industrial Property to||200 Research 32000|
|572 Bank (Payment of fees) 2000|
- The project doesn´t succeed because the investments in the project has turned into economic loss. That is why project viability should be analyzed.
|32000 670 Loss of the Intangible assets to||200 Research 32000|
Finally, just remember that, as it is about intangible asset accounts and news accounts are been created, we should generate each year theirs respective expenditure accounts to the intangible asset amortizations 680 and the accumulated amortizations account of the intangible asset 280 in negative in the asset. This kind of accounts are usually used to amortize in 5 years or by 20% annual.