GAAP requires that research and development costs must be
A) capitalized.
B) expensed as incurred.
C) accumulated until the existence of future benefits is determined.
D) expensed in part and capitalized in part.

Question

Quizplus · Accepted Answer

Under GAAP (Generally Accepted Accounting Principles), research and development costs are required to be expensed as incurred. This means that companies must recognize these costs as expenses on their income statement in the period in which they are incurred, rather than capitalizing them as assets on the balance sheet to be amortized over future periods.

GAAP Requires That Research and Development Costs Must Be