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The effort puts in toward the product and Processes idea generation and up gradation by company is
known as Research and Development. Often it leads to the ownership of intellectual properties like
copyright and patent.(Investopedia Definition, 2019) Expenses relating to the R&Dactivities on product
and service development are known as R&D Expenses. It is treated as an operating expense whichis
sustained in the process of inventing or developing new products or process. The accounting rule is that,
expenditures are to be charged to expense as incurred. The R&D accounting consists of those activities
which develop or upgrade products or processes.(Silaen, P., & Williams, R., 2009)A research &
development institution is entirely dissimilar from a non R&D institution. The activity,
characteristics, goals, planning and accounting everything is different from the other. The following
are the R&D functional area activities: