Section 10 in The Cost Accounting Records (Electricity Industry) Rules, 2001
10. Research and Development Expenses:
(1)The proper records showing the details of expenses, if any, incurred by the company on the research and development work of the activities covered under these rules shall be maintained.(2)The method of charging these expenses to the cost of activities under reference and all other products or activities shall be indicated in the cost records. Where the utility of such research and development work extends over more than one financial year, such expenses shall be treated as deferred revenue expenses and charged to the cost of activities under reference and all other products if any, on equitable and reasonable basis and applied consistently. The detailed criteria on which it has been decided to extend the utility period of these expenses to more than one financial year shall be disclosed in the cost records. The following criteria, which are only indicative and not exhaustive, may be adopted in such cases:(i)the output or process is clearly defined and the costs attributable to the output or process can be separately identified;(ii)the technical feasibility of the output or process has been demonstrated;(iii)the management of the enterprise has indicated its intention to produce and market or use the output or process;(iv)there is a reasonable indication that current and future research and development costs to be incurred on the project together with expected production, administrative and selling costs are likely to be more than covered by related future revenues or benefits; and(v)adequate resources exist or are reasonably expected to be available to complete the project and market the output or process.(3)The expenses incurred by the Research and Development Department for providing technical know-how to outsiders shall be recorded separately and excluded from the cost of activities under reference. The amount recovered for providing technical know-how to outsiders shall also be indicated separately and excluded from the income arising from the sale of outputs or activities under reference.
