The Perma Company spent $300,000 on research and development during Year 8 to generate new product lines.One of the three projects looks like it will ultimately be technologically feasible while the other two projects resulted in unsuccessful efforts.For the project which may become technologically feasible, a total of $125,000 was incurred during Year 8.Under U.S.GAAP, how much of the $300,000 should be recognized as an expense in Year 8?
A)$300,000
B)$225,000
C)$175,000
D)$50,000
E)$0

Question

Quizplus · Accepted Answer

Under U.S. GAAP, research and development costs are expensed as incurred. This includes costs for projects that are successful, unsuccessful, or still pending determination of success. Therefore, the entire $300,000 spent on research and development during Year 8 should be recognized as an expense in Year 8.

The Perma Company Spent $300,000 on Research and Development During