The Theoretical Justification for Expensing Research and Development (R&D) Cost

question 24

Multiple Choice

The theoretical justification for expensing research and development (R&D) cost as it is incurred is based on which of the following arguments?

• A) R&D costs provide no future benefits, thus it does not meet the definition of an asset
• B) R&D costs are incurred to generate current period revenue; thus the matching concept requires that it be expensed as incurred.
• C) Whether R&D costs that have been incurred will provide future benefit is uncertain, thus it does not meet the definition of an asset.
• D) Since R&D costs have been incurred during the current period, they meet the definition of an expense.

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Definitions:

Glomerular Filtration Membrane

A specialized filter in the kidney, consisting of capillary networks, that allows the passage of water and small solutes into the nephron while retaining larger molecules.

Urinalysis

A test of urine to detect and manage a wide range of disorders such as urinary tract infections, kidney disease, and diabetes.

Countercurrent Exchanger

A mechanism by which heat or some chemical constituents are exchanged between flowing fluids moving in opposite directions to maximize transfer efficiency.