Acquired in-process research and development should be
A) capitalized when acquired but not amortized.
B) capitalized when acquired and amortized over a period not to exceed 40 years.
C) capitalized when acquired and amortized based on the number of units of product or services sold each period.
D) expensed when acquired.

Question

Quizplus · Accepted Answer

Acquired in-process research and development should be expensed when acquired according to GAAP (Generally Accepted Accounting Principles). This is because in-process research and development is considered to have no alternative future use and its future benefits are uncertain, making it impossible to accurately estimate its useful life. Therefore, it should not be capitalized and amortized.

Acquired In-Process Research and Development Should Be