In 2020, Peterson Corporation incurred research costs as follows: Materials and supplies..........................................................$\$ 60,000$
Personnel .....................................................................................65,000

Indirect costsmallocated......................................................... 80,000
$\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $205,000

These costs relate to a product that Peterson expects to market in 2021. It is estimated that these costs will be recouped by December 31, 2023. How much of these costs could be capitalized in 2020?

Question

In 2020, Peterson Corporation incurred research costs as follows: Materials and supplies..........................................................$\$ 60,000$
Personnel .....................................................................................65,000

Indirect costsmallocated......................................................... 80,000
 $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $                                                                                     $205,000

These costs relate to a product that Peterson expects to market in 2021. It is estimated that these costs will be recouped by December 31, 2023. How much of these costs could be capitalized in 2020?

Quizplus · Accepted Answer

Under U.S. GAAP, research and development costs are expensed as incurred. Therefore, none of the costs related to the product Peterson expects to market can be capitalized in 2020.

In 2020, Peterson Corporation Incurred Research Costs as Follows: Materials $60,000\$ 60,000$60,000

In 2020, Peterson Corporation Incurred Research Costs as Follows: Materials $\$ 60,000$