On its 2016 income statement, Abbott Laboratories reported research and development expense of $1,422,000,000.
Which of the following statements must be true?

Question

Quizplus · Accepted Answer

Research and development (R&D) expenses are costs associated with the research and development of a company's goods or services. R&D expenses are typically expensed in the period they are incurred and do not necessarily mean that the company spent the exact amount in cash, as non-cash expenses could be included. They reduce the net income for the period in which they are recognized. The statement does not imply that Abbott Laboratories capitalized any R&D costs, as generally accepted accounting principles (GAAP) usually require R&D to be expensed as incurred. There's also no information provided that suggests the amount includes amortized R&D costs from prior years.

On Its 2016 Income Statement, Abbott Laboratories Reported Research and Development