AASB138 now requires research costs to be expensed, whereas previously, they could be capitalized. What are the social and environmental implications of this change?

This change in accounting guidance could impact both society and the environment. Previously, research costs could be capitalized on the balance sheet and amortized through the income statement. This smooth the expense and showed better financial performance and profitability (greater assets and smoother expenses). As such, companies were incentived to continue to research. Now with the change, research could be deterred now that costs are expensed and that could hurt innovation that impacts society and the environment. It could help the environment if there is less waste, but new technology that could help the environment may take longer to invent.