R&D Costs Are Expensed in the Period That They Occur

question 107

Multiple Choice

R&D costs are expensed in the period that they occur,

• A)which is a violation of the matching principle.
• B)because FASB determined that the benefits of R&D are often harder to pinpoint than the costs.
• C)because is was the only way FASB could get verifiability.
• D)because IASB lobbied FASB to do so.
• E)because the U.S.Congress passed a law on it.

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Definitions:

Rate of Increase

The speed at which a particular variable, such as price, cost, or quantity, grows over a specified period of time, typically expressed as a percentage.

Investment

Positioning funds with the foresight of generating earnings or profits.

Years

A unit of time used to measure duration, typically used to denote experience or age.

Trust Fund

A legal arrangement through which assets are held by a trustee for the benefit of another party, often used for estate planning or to manage wealth.