The research and development expenses into accounting?s examined in the frame of international financial reporting standards and Turkish accounting standards, in Turkey.

In the environment of the developing technology and global competition, Research and Development Activities (R & D) for new or already developed product projects have been the prior focus of both enterprises and countries. In such an environment, enterprises are obliged to attach the required importance to the research and development activities to sustain their competitive positions and to increase their productivity performances. The importance of research and development activities has recently been understood in our country and necessary legal arrangements have been made in this framework. Turkish Accounting Standards Board has been established both to follow the international markets closely and adapt to them, and to end current multi-headed application regarding the account and financial reporting, and this Board has made important and serious strides in terms of accounting standards. The definitions of research and development have been given one by one under the section of ?definitions? in the 8th paragraph of TAS- 38 and IFRS- 38. According to this: Research: A specific and planned examination which is undertaken in order to gain a new scientific or technical knowledge and understanding. Development: The application of the results of the research or other knowledge in the production plan or design of newly or significantly developed material, device, product, process, system or services before starting the commercial production or use. Besides these definitions, other institutions and organizations in our country also gave different definitions of R&D with the notifications they issued for the enterprises which are subject to their own legislations. Entry of the R&D expenses into accounting has been explained in different sections of IFRS and TAS. It has been envisaged in these standards that an enterprise can only enter its intangible asset into accounting if the determined criteria has been provided. The process of entry into accounting has been determined separately for the expenses of research and development. In the research stage, as it is impossible for the enterprise to prove the existence of its intangible asset which will bring economic benefits in the future, these expenditures are entered into accounting when they are materialized. However in some cases, the enterprise may detect an intangible asset in the development stage of an intra-enterprise project, and indicate that the related asset will bring economic advantages in the future. The reason of this is that the development stage is an upper stage than the research stage. It is envisaged in both IFRS and TAS that the expenses related to research activities are written off, whereas the expenses related to development activities are activated. In our country, the necessity and importance of research and development activities has recently been understood and in this framework many legal arrangements have been made to foster the R&D activities. R&D reduction is the amount which is calculated at a rate of 40 % on the materialized R&D expenses and reduced from income and corporation tax base. Tax payers will realize the R&D reduction from the profit on the statement, which they calculate at the rate of 40% of R& G expenses which they have put as the issue of reduction in the term. R&D reduction will be applied in both annual statement and provisional tax returns as of the starting date of R&D activities. Procedures and principles related to R&D reduction is determine by Revenue Administration Department. In the first part of this research; sections covered in the framework of general view of R&D are the definitions of R&D expenses, separation of the R&D activities from each other and finally R&D in The World and Turkey. In the second part; in the framework of IFRS and TAS, the entry of the R&D expenses into accounting has been examined. And in the third part, the evaluation of the research and development activities in the framework of tax and incentive legislation has been done.