In financial statements, R&D costs are reported under GAAP. It states that the research and development costs should have to be expensed in the current period. If an organization is spending money for the purpose of research and development, it should record the expense in the current period and report it in the monetary statements of the organization. This must be revealed in a note or as a separate line item. If research and development is performed for others and not for the organization, it would be recorded as an inventory and would ultimately be incorporated in the cost of materials being sold. Moreover in some situations, an organization can report some of its costs as noncurrent or fixed assets. It is done when items are expected to be consumed for a number of years which could be possible via depreciation (costs related to tangible assets) or amortization (costs related to intangible assets).