GAAP require that research and development costs to develop a new product be
A)capitalized in the patents account.
B)expensed in the period incurred.
C)capitalized in the research and development costs account.
D)amortized over the expected economic life of the new product.

Question

Quizplus · Accepted Answer

GAAP require that research and development costs be expensed in the period incurred, rather than capitalized. This is because research and development costs are uncertain in proving their commercial viability and there is no guarantee of future income or benefits from those costs. Therefore it is better to expense these costs in the period incurred.

GAAP Require That Research and Development Costs to Develop a New