If a Company Constructs a Laboratory Building to Be Used

question 2

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)amortization deducted as part of research and development costs.
• C)amortization 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:

Cash Flows

Refers to the net amount of cash and cash-equivalents being transferred into and out of a business.

Discounted Value

Discounted value is the present value of a future amount of money or stream of cash flows given a specified rate of return, reflecting the time value of money.

Present Value

The current worth of a future sum of money, given a specific rate of return or discount rate.

Future Value

The value of an investment or cash at a specified future date, considering the interest rate or rate of return.