Which of the following statements about the tax treatment of research and experimental expenditures is true?
A) The treatment violates the tax principle of conservatism.
B) The treatment creates a favorable book/tax difference.
C) The treatment minimizes the after-tax cost of the expenditures.
D) Both the treatment violates the tax principle of conservatism and the treatment minimizes the after-tax cost of the expenditures are true.

Question

Quizplus · Accepted Answer

The tax treatment of research and experimental expenditures allows for immediate expensing or capitalization and amortization over a period of years, which can minimize the after-tax cost of these expenditures. This approach may not align with the conservative principle, which would typically defer recognition of such expenses until the benefits are more certain, thus both A and C are true, making D the correct choice.

Which of the Following Statements About the Tax Treatment of Research