Analysis Of Research And Development Activities In BSF Ltd

Bio sustainable feeds: nature and value of the research undertaken

Describe about the Analysis of Research and Development Activities in BSF Ltd.

The report focuses upon the evaluation of research and development activities carried on by Bio-sustainable Feeds. The basic distinction between the research and development aspects are elucidated with further discussions in methodologies and R&D activities. The discussion in relation to the current research work undertaken by the company has been undertaken in context of research work and breakthroughs in aquaculture and development of fish feeds. The accounting treatment and taxation aspects pertaining to research and development costs are discussed with reference to IAS and AASB. Moreover, the reasons underlying the undertaking of research activities by corporate entities are evaluated in light of growing dependency or product development. The determination of fair market value relating to the patents has been taken into account. Further, the accounting treatments of expenditure upon research activities along with the treatment pertaining to government grant has been showcased by through use of journal entries with appropriate sets of narration.

The changing demand and increasing shortage of food supplies across the globe has brought forward United Nations and World Bank to implement innovative research techniques and boost the livestock food supplies. The most rapidly growing sector in the food production can be considered as the aqua cultural sector. Several types of research has led to bio sustainable feeds for the improvement in the high-value of fishery products and at the same time diluting the risks related to under supply of the livestock products. Through various research procedures it has been observed that in compared to the other forms of livestock products, aquaculture and fishery business has shown more potential in being an efficient source of food supplies (Levidow, Birch and Papaioannou 2013).

It has been further observed that the fishery products act as the main source of mineral with the presence of omega-3. The vital need for protein such as amino acid and vitamins are fulfilled through fishes and various other forms of aquatic life. The non-fish items such as granola and soya been has considerably reduced the requirement of fishes and various other products which are not consumed by human beings. These products have led to a considerable amount of reduction in the fisheries. In order to address this issue several companies have taken the initiative of inclusion of scallops, salmons, sardines and trout with the use of weed based plantation in order to convert the resources of plant into a rich source of nutrients (Tittonell 2014).

Cons of the research work done by BSF Limited

It has been observed that the company has focused on maintaining a high production rate for the fishery items particularly which have a significant value in the market. The company has further provided cheap fishes as the feeds. The conversion rate was observed to be highly adverse in order to produce high-value of fishes, which were in tune of low value fishes utilized as the feeds. The various types of research outcomes have shown detrimental economic implication with lower amount of population purchasing the high-value fishery products. It has been further observed that the fishery products they are available only to the individuals with high income. It doesn’t further observed that the conversion rate is set in such a manner that it affect the entire biodiversity and a larger amount of fishes are used up as made in feeds otherwise which could have been utilized for the purpose of human consumption. It has been further observed that the planned based weed has shown a deteriorating level in the production of high value fishes. The result is depicted the natural feeds often cause problems with the growth process and increase the growth time of the fishes. It was further observed that the average size of the matured fish demonstrated a decline then plant feeds very used in compared to the size of fish when fish based weeds where used. The different types of outcomes of the research methodology further stated that a substantial amount of cost was involved for aqua feeds due to the increase in amount of breeding process in the high-value fishes (Sultana et al. 2013).

In terms of research activities, there are two primary branches that encompasses all forms of research activities, fundamental or basic research and applied research. Fundamental research inculcates inventions and discoveries that forms foundations to other form of research activities. The discoveries and insights gained from fundamental research have been all encompassing in the sense that such findings vitiates the core of our prevalent understanding regarding a particular phenomenon or fundamental laws of nature (Harper, Jones and Marcus. 2013). In case of applied research, emphasis is laid upon empirical testing in order to gain insights that vary from conventional research theories and models. Applied research methods employ numerous forms of approaches through inclusion of data synthesizing techniques that results towards better problem solving mechanism as applied research is result and problem driven (Harrison, Pardo and Cook 2012).

Distinction amongst Research and Development

In regards to development activities, the rise in heterogeneity and product differentiation has in turn  gave rise to emphasis upon raising the level of development operations (Åkerlind, G.S., 2012). The scope of development pertains to adding multiple features onto products to either cater to the rising levels of competition in markets, or in order to associate a higher value onto the products. The amount of development activities are also dependant upon the changes in preferences of consumers, the dynamism in prevailing sets of technology.

While research works tends to focus upon the initiation of creative idea that can in turn be converted into a potential product. On the other hand development activities pertains to include the practical development of prototypes or specimens that can be utilized in mass production activities. While research focuses on innovations, development activities tends to inculcate such innovations onto live products thereby providing tangibility to the innovations.

Numerous accounting bodies around the globe provides separate treatment pertaining to research and development expenses. The accounting treatment pertaining to the research and development activities comes under the purview of AASB 138 which enumerates that such R&D activities tends to facilitate the amount of innovations and increases the overall scientific knowledge available at the moment (Ato.gov.au. 2016).

The rapid degree of innovations in varied fields has given rise to increasing the levels of newer sets of application and emergence of newer sets of products that has been forged ahead the levels of scientific applicability in functioning of products. The emergence of innovative products tends to open newer markets and thereby increasing the overall levels of business transactions pertaining to the product.

It has been assumed that the later form of return pertaining to $200 million a year regarding ther next 10 years have been taken into account.

Computation of Fair market value
Year	Discount Rate	Cumulative Discount Rate each year	(Discount rate factor each year)	Annual Returns Generated	Discounted Return
1	0.08	1.08	0.925925926	200,000,000	185185185.2
2	0.08	1.166	0.85733882	200,000,000	171467764.1
3	0.08	1.259	0.793832241	200,000,000	158766448.2
4	0.08	1.3605	0.735029853	200,000,000	147005970.6
5	0.08	1.4693	0.680583197	200,000,000	136116639.4
6	0.08	1.5869	0.630169627	200,000,000	126033925.4
7	0.08	1.7138	0.583490395	200,000,000	116698079.1
8	0.08	1.8509	0.540268885	200,000,000	108053776.9
9	0.08	1.9990	0.500248967	200,000,000	100049793.4
10	0.08	2.1589	0.463193488	200,000,000	92638697.62
					1342,016,280

Date	Particulars	Amount (Dr)	Amount (Cr)
2013	Cash A/C…………………………………….Dr	500,000,000
	To CSIRO A/C		500,000,000
	(Being receipt of grant from Commonwealth Scientific and Industrial Research Organization in terms of aquaculture feeds research )
2014	Research and Development A/C………………Dr	360,000,000
	To Cash A/C		360,000,000
	(Being expenses incurred in course for research activities)
2014	Plant Feed A/C……………………………….Dr	360,000,000
	To Research and Development A/C		360,000,000
	(Being payment made in terms of  Plant based feed)
2015	Research and Development A/C………………Dr	160,000,000
	To Cash A/C		160,000,000
	((Being expenses incurred in course for research activities)
2015	Development Cost A/C.………………………Dr	160,000,000
	To Research and Development A/C		160,000,000
	(Being cash paid in course for research and development operations)

 

Since the company is not the sole aquaculture research organization that has implemented research based upon the degree of research propositions, thereby, the company cannot claim to have been the exclusive rights pertaining to biological development of aquaculture feeds. Numerous developments pertaining to implementation of the non fish feeds through usage of soybeans, protein supplements replacing fish feeds have been undertaken by the previous researcher (Parnham and Sies 2013). Thereby the claim pertaining to the restricted use of biological feeds by BSF Ltd can be dismissed. Moreover, the research work pertaining to the fish feeds are still ongoing and therefore the amount of claims made by the company are confusing and misleading in nature.

Conclusion:

The current study tended to cater to the accounting treatments and valuation principles pertaining to the amount of research that have been conducted by Bio Sustainable Feeds Ltd in the course of past three years. Moreover, the significance of research and development activities pertaining to the research relates to the degree of benefits derived through mitigation of food shortages pertaining to the capital. 

References and Bibliography:

Lemos, D. and Tacon, A.G., 2016. Use of phytases in fish and shrimp feeds: a review. Reviews in Aquaculture.

Levidow, L., Birch, K. and Papaioannou, T., 2013. Divergent Paradigms of European Agro-Food Innovation the Knowledge-Based Bio-Economy (KBBE) as an R&D Agenda. Science, Technology & Human Values, 38(1), pp.94-125.

Sultana, M.S., Koshio, S., Ishikawa, M., Yokoyama, S. and Ikemura, T., 2013. Effects on Dietary Supplement of Shochu Distillery By-Product (SDBP) on the Growth of Red Sea Bream. Aquaculture Science, 61(1), pp.047-054.

Tittonell, P., 2014. Ecological intensification of agriculture—sustainable by nature. Current Opinion in Environmental Sustainability, 8, pp.53-61.

Ato.gov.au. (2016). Home page | Australian Taxation Office. [online] Available at: https://www.ato.gov.au/ [Accessed 15 Sep. 2016].

Harper, C., Jones, N. and Marcus, R., 2013. Research for development: A practical guide. Sage.

Noyes, J., Gough, D., Lewin, S., Mayhew, A., Michie, S., Pantoja, T., Petticrew, M., Pottie, K., Rehfuess, E., Shemilt, I. and Shepperd, S., 2013. A research and development agenda for systematic reviews that ask complex questions about complex interventions. Journal of clinical epidemiology, 66(11), pp.1262-1270.

Parnham, M.J. and Sies, H., 2013. The early research and development of ebselen. Biochemical pharmacology, 86(9), pp.1248-1253.

Harrison, T.M., Pardo, T.A. and Cook, M., 2012. Creating open government ecosystems: A research and development agenda. Future Internet, 4(4), pp.900-928.

Åkerlind, G.S., 2012. Variation and commonality in phenomenographic research methods. Higher Education Research & Development, 31(1), pp.115-127.