Research on Capitalization of R&D Investment of H Company

Abstract

In order to maintain lasting competitiveness, pharmaceutical enterprises continue to increase innovative drug development efforts, resulting in rapid growth of R&D expenditure. According to Chinese accounting standards, enterprises have a certain flexibility in accounting for research and development investment. Taking H Company as the case object, this paper finds that: first of all, declining profit and continuously rising R&D investment may be the main reason why H Company's R&D investment changes from full cost to partial capitalization. Second, if the R&D expenditure in 2022 is adjusted using the previous accounting method of full expense, it will lead to changes in profits, information comparability and tax costs after the implementation of the capitalization policy of partial R&D expenditure. Due to the strong subjectivity of the accounting treatment of pharmaceutical enterprises' R&D investment, this paper provides two levels of suggestions for enterprises and regulatory authorities, aiming at solving the problems faced by enterprises in the capitalization of R&D investment, and to provide reference for solving the problem.