In Accounting for Research and Development Costs

question 21

Multiple Choice

In accounting for research and development costs.

• A) the general rule under both US GAAP and IFRS is that research and development costs should be expensed as incurred .
• B) IFRS generally expenses all research and development costs while US GAAP expenses research costs as incurred but capitalizes development costs once technological and economic feasibility has been demonstrated.
• C) US GAAP generally expenses all research and development costs while IFRS expenses research costs as incurred but capitalizes development costs once technological and economic feasibility has been demonstrated.
• D) both US GAAP and IFRS expense research costs as incurred but capitalize development costs once technological and economic feasibility has been demonstrated.

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Definitions:

Cash Dividends

A portion of a company's earnings distributed to shareholders in the form of cash.

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company’s operations is directly reported.

Accounts Receivable

The amount of money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Cash Sales

Transactions where payment is made in cash at the time of the sale, without any credit extended.