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Most of Apple's R&D spending is not categorized as R&D. R&D spending is for basic tech research not product development.
by jxdxbx 8y ago
Most of Apple's R&D spending is not categorized as R&D. R&D spending is for basic tech research not product development.
- snowwrestler 8y agoAnd my understanding is that companies have considerable latitude in designating whether a particular activity is "R&D" or not. R&D expenditures don't seem like a metric that can be precisely compared across companies, or even reliably connected to future business success. It's not like companies that report the highest R&D spending are always the ones winning.
- mercutio2 8y agoI agree with your second paragraph, but quibble with the first. I don’t think there’s that much latitude. The IRS routinely questions companies large and small, in detail, about whether they were really developing new products, or just polishing/improving existing products. The former counts as R&D (and gets favorable tax treatment), the latter is not. The test is more complicated than this, but latitude is not a word I would associate with this term of art.
- snowwrestler 8y agoI get why the IRS would be interested in companies trying to hide operations inside the favorable tax treatment of R&D, but do you think the opposite is also true? Would the IRS (or SEC) care if a company underreported its R&D spending by choosing to classify new product development as a typical expense?
- mercutio2 8y agoPoint taken. I don’t know if the SEC would care, seems possible, but you’re right, it hadn’t occurred to me anyone would deliberately under report R&D, there probably is latitude in that direction.