When deciding how to account for research and development costs, FASB had to choose between
A)predicative value and timeliness
B)verifiability and neutrality
C)relevance and reliability
D)understandability and decision usefulness

Question

Quizplus · Accepted Answer

FASB had to balance the relevance of providing information about research and development costs with the reliability of that information. They chose to account for research and development costs as an expense when incurred because it provides relevant information about a company's expenses and future prospects while still maintaining the reliability of financial statements. This balances the two qualities of relevance and reliability.

When Deciding How to Account for Research and Development Costs