What is the required accounting treatment for research and development costs?

Research and development (R&D) costs are generally treated as expenses in the period they are incurred according to accounting standards like GAAP and IFRS. This means that companies must recognize R&D costs on the income statement as they arise, rather than capitalizing them as assets. However, certain costs related to development phases may be capitalized if they meet specific criteria, such as demonstrating technical feasibility and future economic benefits. Overall, the primary treatment is to expense R&D costs to reflect their nature as investments in future innovation.