CAPITALIZING R&D EXPENDITURES
The next international version of the System of National Accounts will recommend that R&D (Research and Development) expenditures be capitalized instead of being immediately expensed as in the present <italic>System of National Accounts 1993</italic>. An R&D project creates a new technology, which in principle does not depreciate like a reproducible asset. A new technology is, however, subject to obsolescence, which acts in a manner that is somewhat similar to depreciation. The paper looks at the net benefits of an R&D project in the context of a very simple intertemporal general equilibrium model and suggests that R&D expenditures be amortized using the matching principle that has been developed in the accounting literature to match the fixed costs of a project to a stream of future benefits. Of particular interest is the evaluation of the net benefits of a publicly funded project where the results are made freely available to the public.
Year of publication: |
2011
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Authors: | Diewert, W. Erwin ; Huang, Ning |
Published in: |
Macroeconomic Dynamics. - Cambridge University Press. - Vol. 15.2011, 04, p. 537-564
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Publisher: |
Cambridge University Press |
Description of contents: | Abstract [journals.cambridge.org] |
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