# ASC 730-10-25: Research and Development — Overall — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/730/10/#25-recognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:14:44.016Z to 2026-09-10T01:14:44.016Z Record version: sha256:c63629f26d39fed5657181e0cefe0278fdad6e2aa979c46cbc4e81672a88eaeb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 730-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/730/10/#25-recognition) SEC content: no #### Accounting for Research and Development Costs ##### [730-10-25-1](https://asc.understandingaccounting.org/asc/730/10/#730-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:44.016Z to 2026-09-10T01:14:44.016Z Record version: sha256:938c6a2fd3534de1e347f501269af5d1d320c6eed82218f3b516af598e78ec7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Research and development](https://asc.understandingaccounting.org/glossary/r/#research-and-development "Research is planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service (referred to as product) or a new process or technique (referred to as process) or in bringing about a significant improvement to an existing product or process. Development is the translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use. It includes the conceptual formulation, design, and testing of product alternatives, construction of prototypes, and operation of pilot plants.") costs encompassed by this Subtopic shall be charged to expense when incurred. As noted in paragraph [730-10-15-4(f)](https://asc.understandingaccounting.org/asc/730/10/#730-10-15-4), this Topic does not apply to tangible and intangible assets acquired in a business combination, acquired in an [acquisition by a not-for-profit entity](https://asc.understandingaccounting.org/glossary/a/#acquisition-by-a-not-for-profit-entity "A transaction or other event in which a not-for-profit acquirer obtains control of one or more nonprofit activities or businesses and initially recognizes their assets and liabilities in the acquirer's financial statements. When applicable guidance in Topic 805 is applied by a not-for-profit entity, the term business combination has the same meaning as this term has for a for-profit entity. Likewise, a reference to business combinations in guidance that links to Topic 805 has the same meaning as a reference to acquisitions by not-for-profit entities."), or recognized by a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") upon formation that are used in research and development activities. #### Elements of Costs to Be Identified with Research and Development Activities ##### [730-10-25-2](https://asc.understandingaccounting.org/asc/730/10/#730-10-25-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:14:44.016Z to 2026-09-10T01:14:44.016Z Record version: sha256:686649af889077c8d6cfcc2ab3dcaa4306474f431c6cc8c89e3c18c94b579227 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Elements of costs shall be identified with research and development activities as follows (see Subtopic 350-50 for guidance related to website development): 1. a Materials, equipment, and facilities. The costs of materials (whether from the entity's normal inventory or acquired specially for research and development activities) and equipment or facilities that are acquired or constructed for research and development activities and that have alternative future uses (in research and development projects or otherwise) shall be capitalized as tangible assets when acquired or constructed. The cost of such materials consumed in research and development activities and the depreciation of such equipment or facilities used in those activities are research and development costs. However, the costs of materials, equipment, or facilities that are acquired or constructed for a particular research and development project and that have no alternative future uses (in other research and development projects or otherwise) and therefore no separate economic values are research and development costs at the time the costs are incurred. See Topic 360 for guidance related to property, plant, and equipment; the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 for guidance related to impairment and disposal; and paragraphs [360-10-35-2 through 35-6](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-2) for guidance related to depreciation. 2. b Personnel. Salaries, wages, and other related costs of personnel engaged in research and development activities shall be included in research and development costs. 3. c Intangible assets purchased from others. The costs of intangible assets that are purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) shall be accounted for in accordance with Topic 350. The amortization of those intangible assets used in research and development activities is a research and development cost. However, the costs of intangibles that are purchased from others for a particular research and development project and that have no alternative future uses (in other research and development projects or otherwise) and therefore no separate economic values are research and development costs at the time the costs are incurred. 4. d Contract services. The costs of services performed by others in connection with the research and development activities of an entity, including research and development conducted by others in behalf of the entity, shall be included in research and development costs. 5. e Indirect costs. Research and development costs shall include a reasonable allocation of indirect costs. However, general and administrative costs that are not clearly related to research and development activities shall not be included as research and development costs. Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance: [350-40-65-4](https://asc.understandingaccounting.org/asc/350/40/#350-40-65-4)Elements of costs shall be identified with research and development activities as follows: 1. a Materials, equipment, and facilities. The costs of materials (whether from the entity's normal inventory or acquired specially for research and development activities) and equipment or facilities that are acquired or constructed for research and development activities and that have alternative future uses (in research and development projects or otherwise) shall be capitalized as tangible assets when acquired or constructed. The cost of such materials consumed in research and development activities and the depreciation of such equipment or facilities used in those activities are research and development costs. However, the costs of materials, equipment, or facilities that are acquired or constructed for a particular research and development project and that have no alternative future uses (in other research and development projects or otherwise) and therefore no separate economic values are research and development costs at the time the costs are incurred. See Topic 360 for guidance related to property, plant, and equipment; the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 for guidance related to impairment and disposal; and paragraphs [360-10-35-2 through 35-6](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-2) for guidance related to depreciation. 2. b Personnel. Salaries, wages, and other related costs of personnel engaged in research and development activities shall be included in research and development costs. 3. c Intangible assets purchased from others. The costs of intangible assets that are purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) shall be accounted for in accordance with Topic 350. The amortization of those intangible assets used in research and development activities is a research and development cost. However, the costs of intangibles that are purchased from others for a particular research and development project and that have no alternative future uses (in other research and development projects or otherwise) and therefore no separate economic values are research and development costs at the time the costs are incurred. 4. d Contract services. The costs of services performed by others in connection with the research and development activities of an entity, including research and development conducted by others in behalf of the entity, shall be included in research and development costs. 5. e Indirect costs. Research and development costs shall include a reasonable allocation of indirect costs. However, general and administrative costs that are not clearly related to research and development activities shall not be included as research and development costs. #### Computer Software ##### [730-10-25-3](https://asc.understandingaccounting.org/asc/730/10/#730-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:14:44.016Z to 2026-09-10T01:14:44.016Z Record version: sha256:0660274dacdab4fb8bf631ea90a7f70f3d80a127b9da72795efa1abdf1d21048 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When software for use in research and development activities is purchased or leased, its cost shall be accounted for as specified by (c) in the preceding paragraph and paragraph [730-10-25-1](https://asc.understandingaccounting.org/asc/730/10/#730-10-25-1). That is, the cost shall be charged to expense as incurred unless the software has alternative future uses (in research and development or otherwise). ##### [730-10-25-4](https://asc.understandingaccounting.org/asc/730/10/#730-10-25-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:14:44.016Z to 2026-09-10T01:14:44.016Z Record version: sha256:e858691eb430cec904e4407a903142ac1a865965996915d792bf9224a4ae6b86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Development of software to be used in research and development activities includes costs incurred by an entity in developing computer software internally for use in its research and development activities, are research and development costs and, therefore, shall be charged to expense when incurred. The alternative future use test does not apply to the internal development of computer software; paragraph [730-10-25-2(c)](https://asc.understandingaccounting.org/asc/730/10/#730-10-25-2) applies only to intangibles purchased from others. This includes costs incurred during all phases of software development because all of those costs are incurred in a research and development activity. Transition date:(P) December 16, 2027; (N) December 16, 2027Transition guidance: [350-40-65-4](https://asc.understandingaccounting.org/asc/350/40/#350-40-65-4)Development of software to be used in research and development activities, including costs incurred by an entity in developing computer software internally for use in its research and development activities, are research and development costs and, therefore, shall be charged to expense when incurred. The alternative future use test does not apply to the internal development of computer software; paragraph [730-10-25-2(c)](https://asc.understandingaccounting.org/asc/730/10/#730-10-25-2) applies only to intangibles purchased from others.