During its first year of operation,Dovery Company incurred $345,000 of research costs undertaken with the prospect of gaining new technical understanding about a new nanotechnology procedure.An additional $515,000 was incurred to develop a production process to use that new technology to produce a new lubricant product.Under U.S.GAAP,which of the following is the appropriate accounting for these costs?
A)expense $860,000
B)expense $345,000 and capitalize $515,000 as an intangible asset
C)expense $515,000 and capitalize $345,000 as an intangible asset
D)capitalize $860,000 as an intangible asset

Question

Quizplus · Accepted Answer

Under U.S. GAAP, research and development costs are generally expensed as incurred. Therefore, both the research costs of $345,000 and the development costs of $515,000 should be expensed, totaling $860,000.

During Its First Year of Operation,Dovery Company Incurred $345,000 of Research