Asked by Sapna Rathod on May 23, 2024
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The FASB justified expensing research and development costs for all of the following reasons except
A) the future benefits accruing from these expenditures are highly uncertain.
B) expensing R&D conforms to the conservatism principle.
C) a causal relationship between current R&D and future revenue has not been demonstrated.
D) whatever benefits may arise cannot be objectively measureD.
Expensing R&D
The process of charging research and development costs as expenses in the period they are incurred rather than capitalizing them.
Conservatism Principle
an accounting principle that guides companies to report lower values for assets and revenues, higher values for liabilities and expenses when in doubt, ensuring that financial statements do not overstate the company’s financial position.
- Gain an understanding of how research and development (R&D) and software development costs are treated in accounting.
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Learning Objectives
- Gain an understanding of how research and development (R&D) and software development costs are treated in accounting.
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