USGAAP Requires Firms to Expense Immediately All Internal Expenditures for R&D

question 71

Essay

U.S.GAAP requires firms to expense immediately all internal expenditures for R&D costs.Alternatively,U.S.GAAP could require firms to capitalize and subsequently amortize all internal expenditures on R&D that have future potential.
Required:
Why have standard setters chosen not to allow the capitalization alternative? How would analysts be better served if U.S.GAAP required capitalization of R&D costs?

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Definitions:

Coronary Heart Disease

A condition characterized by reduced blood flow to the heart muscle due to the buildup of plaque in the coronary arteries.

Blood Flow

The continuous circulation of blood through the heart and blood vessels, delivering nutrients and oxygen to the body.

Coronary Arteries

Blood vessels that supply blood and oxygen to the heart muscle, crucial for the heart's function and overall health.

Physical Activity

Any bodily movement produced by skeletal muscles that require energy expenditure, such as exercising or sports.