Question: How do they account for research and development costs – do they expense them or capitalize them? Edit
Answer: Research and Development expenses is essentially the amount of money that a company spends to develop new products. For example, if a pharmaceutical firm hires research scientists to develop new drugs, the salaries of these researchers will generally be exempted in the R &D expense category. Like marketing expenses, but unlike capital expenditures, Research and Development expenses are subtracted from revenues every year directly. Therefore, accountants treat R&D spending as an expense rather than an investment.
Merck research and development expenses for the quarter ending December 31, 2018 were $2.214B, a 4.32% decline year-over-year.
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