The Arnett Corporation Is Contemplating Building a Research and Development

The Arnett Corporation is contemplating building a research and development facility and performing R&D activities in the area of robotics. The president of the company is interested in the accounting required for R&D costs such as materials, facilities, personnel costs, equipment, intangibles purchased from others, and any indirect costs. Arnett's president has asked the company's controller to describe current GAAP requirements with respect to R&D expenditures.
Required:
a.
a. All expenditures incurred for R&D activities are to be expensed unless the expenditures are for specific assets, such as equipment, machinery, and facilities that have alternative future uses. The latter type of expenditures should be capitalized, and the depreciation charges related to these assets should be included in R&D expense. The R&D expense for the period must be disclosed in
a. Based on current GAAP, describe the accounting and reporting requirements for R&D
expenditures such as the ones listed above.
b. Describe the rationale that was used by the FASB in its decision to account for R&D costs as prescribed in your answer to requirement