Research and development costs
A) are classified as intangible assets.
B) must be expensed when incurred under generally accepted accounting principles.
C) should be included in the cost of the patent they relate to.
D) are capitalized and then amortized over a period not to exceed 40 years.

Question

Quizplus · Accepted Answer

Generally accepted accounting principles require that research and development costs be expensed when incurred. This is because there is a high degree of uncertainty surrounding the outcome of research and development activities, and it is difficult to assess the future economic benefits that will result from them. Expensing these costs when incurred provides a more conservative and accurate reflection of the company's financial performance.

Research and Development Costs