If a Company Constructs a Laboratory Building to Be Used

question 11

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) depreciation deducted as part of research and development costs.
• B) research and development expense in the period(s) of construction.
• C) depreciation 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:

Verbal Agreement

An oral contract that is formed through spoken communication rather than in writing, though its legal enforceability varies by jurisdiction.

Guarantee

A collateral promise (in writing) to answer for the debt of another (the principal debtor) if the debtor should default in payment.

Demand for Payment

A formal request issued by a creditor to a debtor requiring payment of an outstanding debt by a specific date.

Guarantee

A formal assurance or promise, typically in writing, that certain conditions will be fulfilled, including the quality and durability of a product or service.