In financial statements

In financial statements, research and development costs are reported following the principles of GAAP. It is needed that the research and development costs are 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 of the current period and report it in the statements of the organization. This must be revealed in a note or in a separate line item. If research and development is performed for others and not for the organization itself, it would be recorded as an inventory and would ultimately be told in the cost of the 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 depreciating (costs related to tangible assets) or amortizating (costs related to intangible assets) the assets.