During Its First Year of Operation, Dovery Company Incurred $355,000

question 3

Multiple Choice

During its first year of operation, Dovery Company incurred $355,000 of research costs undertaken with the prospect of gaining new technical understanding about a new nanotechnology procedure. An additional $495,000 was incurred to develop a production process to use that new technology to produce a new lubricant product. Under U.S. GAAP, which of the following is the appropriate accounting for these costs?

• A) expense $850,000
• B) expense $355,000 and capitalize $495,000 as an intangible asset
• C) expense $495,000 and capitalize $355,000 as an intangible asset
• D) capitalize $850,000 as an intangible asset

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Definitions:

Deception

A deliberate act of misleading or causing someone to believe something that is not true.

Hand Scoring

The process of manually calculating test scores or results, as opposed to using computerized scoring systems.

Error

A mistake or discrepancy that occurs in data, calculations, or actions, often leading to inaccuracies or deviations from expected results.

Diagnosis

The identification of the nature and cause of a certain phenomenon, often used in the context of medical conditions.