Research and development costs incurred by a company should be:
A) capitalized and depreciated over a period not to exceed 20 years.
B) capitalized and amortized over the useful life of the asset.
C) either capitalized and depreciated or expensed immediately at the option of the accountant.
D) expensed on the current year's income statement.

Question

Quizplus · Accepted Answer

Research and development costs should be expensed on the current year's income statement as they are considered as an expense incurred to conduct research and development activities which may or may not result in the creation of an intangible asset or patent. Capitalizing these costs would result in an overstatement of assets and profits. Therefore, option D is the best choice.

Research and Development Costs Incurred by a Company Should Be