- R&D represents the activities companies undertake to innovate and introduce new products and services or to improve their existing offerings.
- R&D allows a company to stay ahead of its competition by catering to new wants or needs in the market.
- Companies in different sectors and industries conduct R&D—pharmaceuticals, semiconductors, and technology companies generally spend the most.
- R&D is often a broad approach to exploratory advancement, while applied research is more geared towards researching a more narrow scope.
- The accounting for treatment for R&D costs can materially impact a company’s income statement and balance sheet.