In Accounting for Research and Experimental Expenditures Incurred in 2018

question 1092

Multiple Choice

In accounting for research and experimental expenditures incurred in 2018, all of the following alternatives are available with the exception of

• A) defer and amortize R&E costs as a ratable deduction over a period of 60 months or more.
• B) expense R&E costs in the year paid or incurred.
• C) expense R&E costs in the year in which a product or process becomes marketable.
• D) capitalize and write off R&E costs only when the research project is abandoned or is worthless.

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Definitions:

Acid-Test Ratio

A strict metric used to assess if a business possesses sufficient current assets to meet its short-term obligations without the need to liquidate inventory.

Times Interest Earned

A financial metric indicating how many times a company can cover its interest obligations with its earnings before interest and taxes.

Debt-To-Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets, used as a measure of financial health.

Equity Multiplier

This financial ratio measures a company's leverage by comparing its total assets to its total shareholders' equity.