The Arnett Corporation is contemplating building a research and development facility and performing R&D activities in the area of robotics. The president of the company is interested in the accounting required for R&D costs such as materials, facilities, personnel costs, equipment, intangibles purchased from others, and any indirect costs. Arnett's president has asked the company's controller to describe current GAAP requirements with respect to R&D expenditures.
Required:
a.Based on current GAAP, describe the accounting and reporting requirements for R&D expenditures such as the ones listed above.
b.Describe the rationale that was used by the FASB in its decision to account for R&D costs as prescribed in your answer to requirement a.

Question

The Arnett Corporation is contemplating building a research and development facility and performing R&D activities in the area of robotics. The president of the company is interested in the accounting required for R&D costs such as materials, facilities, personnel costs, equipment, intangibles purchased from others, and any indirect costs. Arnett's president has asked the company's controller to describe current GAAP requirements with respect to R&D expenditures.
Required: 
a.Based on current GAAP, describe the accounting and reporting requirements for R&D expenditures such as the ones listed above.
b.Describe the rationale that was used by the FASB in its decision to account for R&D costs as prescribed in your answer to requirement a.

Quizplus · Accepted Answer

The Answer of The Arnett Corporation is contemplating building a research and development facility and performing R&D activities in the area of robotics. The president of the company is interested in the accounting required for R&D costs such as materials, facilities, personnel costs, equipment, intangibles purchased from others, and any indirect costs. Arnett's president has asked the company's controller to describe current GAAP requirements with respect to R&D expenditures.
Required: 
a.Based on current GAAP, describe the accounting and reporting requirements for R&D expenditures such as the ones listed above.
b.Describe the rationale that was used by the FASB in its decision to account for R&D costs as prescribed in your answer to requirement a.

The Arnett Corporation Is Contemplating Building a Research and Development