The purpose of this paper is to examine whether managerial ability is associated with the accounting treatment of research and development costs. Whether to aggressively capitalized or expensed conservatively R&D expenditures and to recognized impairment losses for development costs is a matter of managerial choice. Due to the permitted discretion of executive in the accounting regulation, managers have a incentive to take advantage of capitalized R&D expenditures or asset impairment loss. First, we test whether managerial ability affect the accounting treatment of research and development costs. Secondly, we expect that the higher the managerial ability, the lower the recognition of impairment losses for development costs. Lastly we investigate the effect of managerial ability on the relationship between the impairment loss and discretionary accruals. Using Korean listed firms from 2007 to 2018, we provide evidence that firms with high-ability managers are more likely to report R&D activity as expense. We also find there is a negative relationship between managerial ability and recognition impairment loss, but managerial ability do not affect the relationship between impairment losses and discretionary accruals. Our results imply that the accounting treatment of research and development costs is greatly influenced by managerial ability. The results of this study have implications for managers, capital market participants and standard setters in understanding of firms" capitalization choices.