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Nominal Code Help

  • 273 posts
  • # 54825

Hi all

My brain is mince today, in fact it has been since doing the cash office at Model Rail Scotland exhibition (SECC) since Friday - my motto for next year - never ever volunteer for anything again!

Can anyone help with coding 'Research & Development costs' nominal code

On tas books I keep wanting to put protype costs into 4000 upwards (Cost of Sales, Purchases) but then again I should really put it into 5000 upwards for Expenses, but when I really get to thinking about it I could put it into Fixed Assets as potentially company could sell a prototype eventually.

I'm covered to a certain extent as the CA will sort it but would be good to get it right first off.......

arrrrgggghhhhh





  • Member PM.Dip
  • Practice Licence
  • 58 posts
  • # 54830

It would depend on the value of the transactions and the size of the company.  If there was considerable expenditure on R&D that is clearly identifiable I think I may consider a fixed asset account.  If it consists of much smaller (immaterial) amounts then I would probably put it in the P&L.  But I wouldn't have thought R&D can ever be a direct cost (cost of sale) or revenue (4000/5000).  In any case I would ensure all R&D is allocated to a specific project code or nominal code so that it is clearly identifiable on the Trial Balance at the end of the year. Some R & D is allowable for tax relief, I suggest you check with the accountant to see where he would prefer it to go.  

  • 273 posts
  • # 54850

Its fairly substantial and could potentially be sold on which is why I keep wanting to put it in Fixed Assets - I'll create an R&D code in Fixed Assets so that the CA can move it if need be.  

Thanks Anne - you've helped make steak (well maybe more frying than fillet) of my brain again  Laughing

  • 698 posts
  • # 54861

Hi Liz

For some Bed Time reading Check out SSAP 13, you can also look at IAS 9 these both cover the accounting standards related to R&D.

You also need to look at the HMRC site to check out if the R&D qualifies for the R&D Tax credits.

You would be correct to classicy it as an Intangible fixed asset (see FRS 10) of the company as it is a cost from which future revenue will be derived which is also covered I believe by SSAP 2.

I stand to be corrected on the above but hope this is of some help.

Kind regards
Stuart

  • 273 posts
  • # 54924

Thanks Stuart Smile

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