For financial reporting purposes, GAAP requires organization costs to be
A)expensed in the period in which they are incurred
B)capitalized and amortized over 20 years
C)capitalized and amortized over the first five years of the company's existence
D)capitalized and treated as an intangible asset with an indefinite life

Question

Quizplus · Accepted Answer

Under GAAP, organization costs must be expensed in the period in which they are incurred, rather than capitalized and amortized over time. This approach reflects the principle that the benefits of these costs are consumed quickly and do not provide future economic benefits that meet the criteria for capitalization.

For Financial Reporting Purposes, GAAP Requires Organization Costs to Be