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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

General Accounting

Specialized Accounting
Research and Development (R&D) Arrangements

GASB 62 modifies or supersedes FASB and AICPA pronouncements prior to Nov. 30, 1989. It establishes standards of accounting and financial reporting for an agency that is a party to a research and development (R&D) arrangement through which it can obtain the results of R&D funded partially or entirely by others.

GASB 62 specifies how an agency accounts for the obligation incurred when it enters a funding arrangement with other parties for its R&D. The eventual use of GASB 62 applies if the agency is obligated to pay for sponsored research regardless of the original intent.

Forms of R&D Arrangements

Other factors may be present and relevant when determining the nature of an agency’s obligation related to R&D arrangements and how that obligation is reported.

Liability to repay to other parties

  • If repayment is required regardless of the result of R&D activities, estimate or recognize it as a liability.
  • R&D costs are capitalized or expensed as incurred.

Obligation to perform contractual services

  • If repayment of loan depends on the result of R&D activities, this obligation is a contract to perform R&D for others.
  • Apply accounting for contract revenue and costs.

Loan to other parties

  • If repayment of loan depends on the result of R&D activities, the loan cost is capitalized and charged to R&D expenses.
  • If the loan can be identified as relating to other activity (such as marketing or advertising), those costs are accounted for according to their nature.


If the obligation is a contract to perform research and development for others, disclose:
  • Terms of significant arrangements as of date of the financial statements, including:
    • Royalty arrangements
    • Purchase provisions
    • License agreements
    • Commitments to provide additional funding
  • Amount of compensation earned and costs incurred during the fiscal year

Each agency is required to disclose its R&D arrangement information by submitting the GASB 62 Questionnaire on or before Aug. 15, 20CY.

Glenn Hegar
Texas Comptroller of Public Accounts
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