Asked by Krystina Marschall on Jun 23, 2024
Verified
When deciding how to account for research and development costs, FASB had to choose between
A) predicative value and timeliness
B) verifiability and neutrality
C) relevance and reliability
D) understandability and decision usefulness
FASB
The Financial Accounting Standards Board is an independent organization responsible for establishing accounting and financial reporting standards for companies and nonprofit organizations in the United States.
- Comprehend the accounting methods for research and development expenses according to Generally Accepted Accounting Principles (GAAP).
- Understand the distinctions between physical and non-physical assets.
Verified Answer
ZH
Zachary HarrillJun 28, 2024
Final Answer :
C
Explanation :
FASB had to balance the relevance of providing information about research and development costs with the reliability of that information. They chose to account for research and development costs as an expense when incurred because it provides relevant information about a company's expenses and future prospects while still maintaining the reliability of financial statements. This balances the two qualities of relevance and reliability.
Learning Objectives
- Comprehend the accounting methods for research and development expenses according to Generally Accepted Accounting Principles (GAAP).
- Understand the distinctions between physical and non-physical assets.
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