Both R&D and IR&D costs are treated as a separate cost objective (often with its own job number) for purposes of accumulating costs. Only the sponsored R&D costs are treated as final cost objectives where general and administrative costs can be allocated and revenues recognized. If R&D costs exceed a contract or grant value, the excess is usually unallowable and cannot be considered a valid cost of the contract unless, as Unisys Corp showed, certain costs were legitimately charged to IR&D on the grounds the efforts were not required by the contract terms. IR&D costs, on the other hand, are commonly considered period costs and their allocability an indirect cost to government contracts are governed by cost accounting standards.

What constitutes IR&D and B&P costs and their allocation are established by CAS 420, "Accounting for Independent Research and Development and Bid and Proposal Costs".

The basic unit of accumulation is an individual IR&D project. Projects that are immaterial in amount can be accumulated together in a single account or job number. So, for example, a contractor can set a threshold, say $5,000, where only if a project is expected to exceed this amount will a separate project number be assigned. Costs are assigned to IR&D projects as if they were final cost objectives (e.g. contracts, task orders, etc.) except CAS 420 states G&A costs may not be applied to the IR&D projects.

Depending on the nature of the projects, IR&D costs can be accumulated at the corporate, group or business segment level. The proper accumulation point is whether the costs benefit one segment, multiple segments within a group or all segments.

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