Which of the following items is not considered an asset?
A)Patents.
B)Research expenses of an R&D project.
C)Equipment under lease where the risks and rewards flows into the entity.
D)All of the given answers.
E)Research expenses of an R&D project and equipment under lease where the risks and rewards flows into the entity.

Question

Quizplus · Accepted Answer

The item that is not considered an asset among the options provided is:
2. Research expenses of an R&D project.
1. Patents are considered intangible assets because they provide economic benefits to the entity by granting exclusive rights to produce, use, or sell the patented invention.
3. Equipment under lease where the risks and rewards flow into the entity can be considered an asset if the lease is classified as a finance lease. In a finance lease, the lessee recognizes the leased equipment as an asset on their balance sheet because they assume most of the risks and rewards of ownership.
Therefore, the correct answer is:
2. Research expenses of an R&D project.
Research expenses are typically considered as expenses rather than assets because they do not provide probable future economic benefits as required by the asset recognition criteria. These costs are expensed as incurred under most accounting frameworks, such as International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP).

Which of the Following Items Is Not Considered an Asset