R&D costs are expensed in the period that they occur,
A)which is a violation of the matching principle.
B)because FASB determined that the benefits of R&D are often harder to pinpoint than the costs.
C)because is was the only way FASB could get verifiability.
D)because IASB lobbied FASB to do so.
E)because the U.S.Congress passed a law on it.

Question

Quizplus · Accepted Answer

FASB determined that the benefits of R&D are often harder to pinpoint than the costs, so they allowed R&D costs to be expensed in the period they occur rather than requiring capitalization and amortization over time. This is a departure from the matching principle, but it is meant to provide better information to users of financial statements.

R&D Costs Are Expensed in the Period That They Occur