How should research and development costs be accounted for, according to an IASB Statement?
A) Must be capitalized when incurred and then amortized over their estimated useful lives.
B) Must be expensed in the period incurred.
C) May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved.
D) Must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable.

Question

Quizplus · Accepted Answer

The IASB Statement requires that research and development costs must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable. Therefore, option D is the correct answer. Option A is incorrect because research and development costs must not be capitalized unless certain criteria are met. Option B is also incorrect because research and development costs cannot be expensed immediately in all cases. Option C is incorrect because the materiality of the amounts involved does not affect the accounting treatment of research and development costs.

How Should Research and Development Costs Be Accounted For, According