How Should Research and Development Costs Be Accounted For, According

question 35

Multiple Choice

How should research and development costs be accounted for, according to a Financial Accounting Standards Board Statement?

• A)Must be capitalized when incurred and then amortized over their estimated useful lives.
• B)Must be expensed in the period incurred.
• C)May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved.
• D)Must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable.

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Definitions:

Sugar

A sweet-tasting, soluble carbohydrate found in many plants and used as a sweetener in food and beverages.

Price Elasticity

A gauge of the degree to which demand for a merchandise reacts to alterations in its price, showing how susceptible the amount demanded is to changes in price.

Specific Tax

Tax of a certain amount of money per unit sold.

Consumers

Individuals or groups who are the final users of products and services generated within an economy.