Which of the following research and development expenditures should be capitalized and depreciated?
A) Engineering costs incurred to advance the new product to a production stage
B) Cost of marketing research to promote a new product
C) Material, labor, and overhead costs incurred in developing a new product
D) Acquisition of machinery that can also be used for future R&D projects

Question

Quizplus · Accepted Answer

The acquisition of machinery that can also be used for future R&D projects should be capitalized and depreciated. This is because it represents a tangible asset that will provide economic benefits over multiple periods, and its cost is allocated over its useful life through depreciation. Costs directly associated with the research and development phase, such as engineering costs, marketing research, and initial development costs (materials, labor, overhead), are typically expensed as incurred under most accounting standards, including IFRS and US GAAP.

Which of the Following Research and Development Expenditures Should Be