During 2007, Leon Co.incurred the following costs: $\begin{array}{ll}
\text { Testing in search for process alternatives } & 350,000 \
\text { Costs of marketing research for new product } & 250,000 \
\text { Modification of the formulation of a process } & 510,000 \
\text { Research and development services performed by Beck Corp. for Leon } & 325,000
\end{array}$ In Leon's 2007 income statement, research and development expense should be
A)$510,000.
B)$835,000.
C)$1,185,000.
D)$1,435,000.

Question

Quizplus · Accepted Answer

Research and development expenses include costs for testing in search for process alternatives, modification of the formulation of a process, and R&D services performed by another company. Therefore, the total R&D expense is $350,000 + $510,000 + $325,000 = $1,185,000. Marketing research costs are not included in R&D expenses.

During 2007, Leon Co In Leon's 2007 Income Statement, Research and Development Expense Should