Acquired In-Process Research and Development Should Be

question 72

Multiple Choice

Acquired in-process research and development should be

• A) capitalized when acquired but not amortized.
• B) capitalized when acquired and amortized over a period not to exceed 40 years.
• C) capitalized when acquired and amortized based on the number of units of product or services sold each period.
• D) expensed when acquired.

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Definitions:

Proportional Rate Structure

A tax system where the tax rate remains constant regardless of the amount of income, as opposed to progressive or regressive tax structures.

Progressive Rate Structure

This is a tax system in which the tax rate increases as the taxable base amount increases, typically applied to incomes to ensure higher earners pay a greater percentage of their income.

Regressive Rate Structure

A tax system where the tax rate decreases as the taxable amount increases, placing a higher burden on lower earners relative to higher earners.

Marginal Tax Rate

The rate at which the next dollar of taxable income will be taxed, a tool used to gauge the impact of additional income or deductions on income tax.