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Research and development costs

CAS - 18 - Companies Law - CAS - 18 - CAS - 18 The following is the Cost Accounting Standard-18 (CAS-18) on "". The standard deals with methods of determining the . In this Standard, the standard portions have been set in bold italic type. These are to be read in the context of the background material which has been set in normal type. 1. Introduction This standard deals with the principles and methods of determining the Research, and Development Costs and their classification, measure .....

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h, and Development Costs including those requiring attestation. 4. Definitions The following terms are being used in this standard with the meaning specified. 4.1 Abnormal cost: An unusual or atypical cost whose occurrence is usually irregular and unexpected and/ or due to some abnormal situation of the production or operation.1 4.2 Cost Object: This includes a product, service, cost centre, activity, sub-activity, project, contract, customer or distribution channel or any other unit in relation .....

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t Expenses are royalties charged on production, hire charges for use of specific equipment for a specific job, cost of special designs or drawings for a job, software services specifically required for a job, travelling Expenses for a specific job. 4.6 Imputed Costs: Hypothetical or notional costs, not involving cash outlay, computed only for the purpose of decision making.6 4.7 Indirect Employee Cost: The employee cost which cannot be directly attributed to a particular cost object. 4.8 Indirec .....

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aining new scientific or technical knowledge and understanding7. 4.11.2 Development: Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services prior to the commencement of commercial production or use8. 5. Principles of Measurement 5.1 Research, and Development Costs shall include all the costs that are directly traceable to research and/or development .....

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3. The salaries, wages and other related costs of personnel engaged in Research, and Development activities; 4. The depreciation of equipment and facilities, and other tangible assets, and amortisation of intangible assets to the extent that they are used for Research, and Development activities; 5. Overhead costs, other than general administrative costs, related to Research, and Development activities. 6. Costs incurred for carrying out Research, and Development activities by other entities an .....

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m the cost of such Research, and Development Activity. 5.3 Any abnormal cost where it is material and quantifiable shall not form part of the Research, and Development Cost. 5.4 Fines, penalties, damages and similar levies paid to statutory authorities or other third parties shall not form part of the Research, and Development Cost. 5.5 The amortisation of an intangible asset arising from the development activity shall be treated as set out in the CAS 16 relating to Depreciation and Amortisation .....

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tributable to a specific product or process shall not form part of the product cost. 6.2 Development cost which results in the creation of an intangible asset shall be amortised over its useful life 6.3 Assignment of Development Costs shall be based on the principle of "benefits received". 6.4 incurred for the development and improvement of an existing process or product shall be included in the cost of production. In case the Research and Development activity related to the improvemen .....

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allocated to a particular period shall be included in the cost of production of that period. If the expenditure is only to improve the quality of the existing product or minor modifications in attributes, the principle shall not be applied. 6.5 Development costs attributable to a saleable service e.g providing technical know-how to outside parties shall be accumulated separately and treated as cost of providing the service. 7. Presentation 7.1 relating to improvement of the process or products .....

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