USGAAP Requires Firms to Expense Immediately All Internal Expenditures for R&D

question 71

Essay

U.S.GAAP requires firms to expense immediately all internal expenditures for R&D costs.Alternatively,U.S.GAAP could require firms to capitalize and subsequently amortize all internal expenditures on R&D that have future potential.
Required:
Why have standard setters chosen not to allow the capitalization alternative? How would analysts be better served if U.S.GAAP required capitalization of R&D costs?

Understand the treatment and implications of material price variances.

Understand the applications of standard cost systems in production and cost control.

Identify the difference between theoretical standards and practical standards and their effect on employee motivation and performance evaluation.

Understand the concept and application of standard costs in cost management and product costing.

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Definitions:

Refractory Period

A time right after being stimulated when a nerve or muscle can't respond to additional stimulation.

Masters and Johnson

A research team known for their pioneering work in the study of human sexual response and the treatment of sexual disorders.

Oral Sex

Sexual activity involving the stimulation of the genitalia by the use of the mouth, lips, or tongue.

Sociological Theorizing

The process of developing theories to explain social behaviors, structures, and systems, often to understand how society functions.