Download US GAAP: Issues and Solutions for the Pharmaceuticals and Life Sciences Industries

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US GAAP—Issues and Solutions for the Pharmaceuticals and Life Sciences Industries
7. Development of alternative indications
Background
Relevant guidance
Company A markets a drug approved for use as a painkiller.
Recent information shows the drug may also be effective in the
treatment of cancer. Company A has commenced additional
development procedures necessary to gain approval for
this indication.
Research and development costs… shall be charged to expense
when incurred [ASC 730–10–25–1].
Should Company A capitalize the
development costs relating to
alternative indications? 
Solution
No. Costs to perform research and development, including internal development costs, should be expensed as incurred, regardless
of history with similar drugs or regulatory expectations.
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PwC