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Product testing expense

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Atharv Sankliya

991 Points Posted on 08 June 2023

1- does product testing expense is capital expenditure or revenue?
2- expense related to event of launch of new products is revenue or capital expenditure?

Replies (4)

Quick Summary

This discussion explores whether product testing expenses should be treated as capital or revenue expenditure. While often considered revenue, the nature of the product (new range vs. entirely new origin) can influence this. The user is seeking clarification on accounting standards like AS 26 or Ind AS, as these don't explicitly address this nuance, and is looking for guidance beyond the general research and development phases.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121526 Points Posted on 08 June 2023

Most of the cases, both considered as revenue expenditures.

CA Ashish Joshi

181 Points Posted on 09 June 2023

If product is new by range of products then testing exp can be considered Revenue & if the product is totally new by nature/origin then the expense can be capitalized.

Yasaswi Gomes new

Finance

3328 Points Posted on 10 June 2023

AS 26 or Indas doesn't mention anything about new range or new origin. Can you help me with the standard Paras please.

I just know research and development phases

Sergio

24 Points Posted on 27 January 2026

Product testing expense refers to the costs a business incurs to evaluate a product’s quality, safety, performance, and compliance before it is released to the market Voopoo Argus P3 Pod Kit 30W. These expenses can include laboratory testing, prototype development, third-party certification fees, user trials, quality assurance staff time, and the tools or equipment needed to conduct tests.