I work at a small biotech company.
Occasionally we license compounds from other companies and then spend our time and money developing the compounds to hopefully be a drug approved by the FDA someday.

My question is, where should the license payments be presented on our P+L?
As a Research + Development expense - because the license payments are integral to acquiring the compound and the R&D expenses that follow

OR

Selling General + Administrative expense - because it is an administrative expense and should not be considered part of Research and Development activities.

Also, if you could point to any source for this recommendation, it would be extremely helpful.

THank you in advance, Herman

I would use R&D because clearly it's product related.

Maggie, Thank you

Would you have any reference or source you could point me to??

Thank you in advance, Herman

S&E Indicators 2006 - Chapter 4: Research and Development: Funds and Technology Linkages - Business R&D (http://www.nsf.gov/statistics/seind06/c4/c4s3.htm)