How to Record IR&D Over-Ceiling Costs
Moving Independent Research and Development (IR&D) costs that exceed the negotiated or allowable ceiling to an unallowable account.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable IR&D Expense | Expense | 75,000.00 | - |
| Allowable IR&D Pool | Contra-Expense | - | 75,000.00 |
💡 Accountant's Note
IR&D costs are generally allowable up to certain limits; costs exceeding these limits must be segregated as unallowable to prevent them from being allocated to government contracts.
Practitioner & Systems Framework
💻 ERP Architecture
Use a specific secondary cost element or unallowable account code in the overhead pool structure.
⚠️ Audit Flags
Exceeding IR&D limits defined in the Advance Agreement or FAR 31.205-18.
📄 Required Documentation
Negotiated IR&D ceiling agreement and monthly budget-to-actual IR&D reports.
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