Generally accepted accounting principles (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 requires that research and development costs be expensed in the period incurred rather than capitalized, as these costs are seen as expenses necessary for the current period's operations, rather than assets with long-term future benefits. While some costs related to developing a new product may be capitalized, such as patent costs or costs for producing a prototype, the research and development costs themselves should be expensed in the current period.

Generally Accepted Accounting Principles (GAAP) Require That Research and Development