If a company constructs a laboratory building to be used as a research and development facility, the cost of the laboratory building is matched against earnings as
A) depreciation deducted as part of research and development costs.
B) research and development expense in the period(s) of construction.
C) depreciation or immediate write-off, depending on company policy.
D) an expense at such time as productive research and development has been obtained from the facility.

Question

Quizplus · Accepted Answer

The cost of the laboratory building is matched against earnings as depreciation deducted as part of research and development costs. This is because the building is a long-term asset, and its cost is allocated over its useful life as depreciation expense, which can be included in the research and development costs category.

If a Company Constructs a Laboratory Building to Be Used