Forsknings- og udviklingsprojekter

Abstract

The aim of this paper is to investigate the challenges that arises, when a firm recognizes development costs in their financial statements in Denmark. The objective of this paper is therefore to identify the requirements, definitions and relevant standards, that apply to the recognition of development costs under the Danish Financial Statements Act. Hereto, it is relevant to understand what definitions and standards that give rise to this recognition. To understand the requirements and different elements of development costs, one first has to understand the difference between development costs in the balance, and how these then proceed through the income statement. The paper will therefore shed light on the different treatments and requirements. The paper will then focus on analyzing the role of development-projects in the financial statements for different Danish entities, reporting under different reporting classes, starting from Class-B with the voluntary inclusion of development costs, up to financial statements from reporting class D, where this is a requirement. Through this, the paper will shed light, on the different roles played by the costs throughout different classes and sizes of entity. Through the analysis and the basic requirements set out in ÅRL, IAS and IFRS, the paper identifies multiple challenges, that impacts the financial statements when development costs are capitalized through the assets. These challenges has been further discussed in the paper, to conclude the overall effect on the financial statements, and the impact this has on the users of the financial statements. These challenges are impossible to interpret in an standardized manner, as the interpretation of the requirements are different from one entity to another. It is therefore required to look at the impact and treatment on an entity-by-entity basis, as the impact on the users of the financial statements can vary, depending on the size of entity, the nature of the development costs and other factors analyzed in this paper.