Research and Development Costs Incurred by a Company Should Be

question 157

Multiple Choice

Research and development costs incurred by a company should be:

• A) capitalized and depreciated over a period not to exceed 20 years.
• B) capitalized and amortized over the useful life of the asset.
• C) either capitalized and depreciated or expensed immediately at the option of the accountant.
• D) expensed on the current year's income statement.

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Definitions:

Required Rate Of Return

The lowest yearly percentage gain necessary to attract individuals or organizations to invest in a specific security or project.

Deflation

A decrease in the general price level of goods and services over a period, leading to increased purchasing power of money.

Market Risk Premium

The additional return an investor demands for taking on the risk of investing in the stock market over a risk-free rate.

Beta

A measure of the volatility, or systematic risk, of a security or portfolio compared to the entire market.