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

Question

Quizplus · Accepted Answer

The cost of constructing a laboratory building for research and development purposes is considered a capital expenditure and is amortized as part of research and development costs over its useful life. This is in accordance with generally accepted accounting principles (GAAP) which require the matching of costs with related earnings. Therefore, option B is the best choice.

If a Company Constructs a Laboratory Building to Be Used