If a Company Constructs a Laboratory Building to Be Used

question 23

Multiple Choice

If a company constructs a laboratory building to be used as a research and development facility,the cost of the laboratory building is matched against earnings as

• A) research and development expense in the period(s)of construction.
• B) depreciation deducted as part of research and development costs.
• C) depreciation or immediate write-off depending on company policy.
• D) an expense at such time as productive research and development has been obtained from the facility.

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Definitions:

Income Tax Expense

The cost to a company for income taxes owed to federal, state, and local governments, recorded as a financial expense in accounting.

Federal Income Taxes

Taxes levied by the federal government on annual income earned by individuals, corporations, trusts, and other legal entities.

State Income Taxes

Taxes imposed by individual states on the income earned by individuals and entities within their jurisdiction.

Cash Payment

A transaction where a payment for goods or services is made using physical currency or through a bank transfer.