Expenses Incurred during trial run

correcting  my earlier  reply  ,  If it  is a  Manufacturing  company  , then  you can show as a   New product  Expenses  under  Direct  Expenses  . 

R & D is correct words  agree, however I will treat this as ( Operating expenses) Direct expenses , also  such  type of expenses are allowed  as deduction  under  section 35  Income tax act 1961   . ( Research & Development  Expenditure )   

Direct expense and chemical used in yiur factory is a raw material used for production. 

There is cost allocation techniques in costing but you check that out. AS 26.46.d the design, construction and testing of a chosen alternative for
new or improved materials, devices, products, processes, systems
or services.

You have to remwmber that research phase is slightly different than develeopment phase. AS10 also capitalises all testing expenses.

If this fails or succeeds, trial and err cost allocations. Everything is meaningful but just cross verify that.

Originally posted by : RAJA P M
	As per my view,If it's new product and its also under development then It will be treat as R&D. This R&D will be account as R&D under Current Asset...After the successful development and put into business/Production it will be taken into expenditure head as per movement...(This is my view)

@ Raja PM i thought you got carried away with tally. But i dont believe in tally. Your accounting is accurate though. The biggest flaw is, Research activities are expensed amd development capitalised. Your cool but what is the truth? I purchased new chamical and used it to test it and what is the principle number which says that? If R&D is just a ledger in tally then 

Dr. R$D - expense

Cr. Bank 

For research phase 

Dr. R$D - asset

Cr. Bank

How will tally recognise this transaction? Lol

Hello Mr ....

Tally is a software...lol

Ledger is a book/note....lol

But, Accounting is not as above...lol

Research activities can't accounting directly to expenditure head...lol

If Research succesful then the said products come into force to sales and its income...lol

If Research unsuccesful then the said products fall and its to loss...lol

In case the research continues then its can't account to PandL...lollll...

I'm not a child using lol...

But, I can handle children with their way as lol....

Since you ppl believed tally is multiple, lets take an example of r n d

There is a masters created within by default. But we have to create stock item masters with purely direct and indirect coats as no R$D pops up. 

So classification is wrong! 

The usual accounting entry is 

Dr. Purchase

Cr. Payables

With the stock item this is what happens

Dr. Stock item - under what? Under Research or development? 

Cr. Bank 

Does it make sense at all? My entry is correct though. 

Lol and I am really fine. There is nothing wrong with you trying to protect your reputatuon. That AS 26 lol your fine but this better

No intangible asset arising from research (or from the research
phase of an internal project) should be recognised. Expenditure on
research (or on the research phase of an internal project) should
be recognised as an expense when it is incurred. Lol

Lol Mr.