Research and development costs should be:
A)Expensed in the period incurred.
B)Expensed in the period they are determined to be unsuccessful.
C)Deferred pending determination of success.

Question

Quizplus · Accepted Answer

Research and development costs should be expensed in the period incurred as they do not meet the criteria of an asset under the Generally Accepted Accounting Principles (GAAP). These costs cannot be deferred as the outcome of the research cannot be reliably predicted. Additionally, determining success or failure of the research is subjective and might vary from one company to another. Thus, the research and development costs should be expensed as incurred.

Research and Development Costs Should Be