Question

What is the appropriate accounting treatment for the value assigned to in-process research and development acquired in a business combination?

Answer 1

Answer:

Capitalize as an asset.

Explanation:

Answer 2

Answer:

The correct answer is: Capitalize as an asset.

Explanation:

Capitalize is an accounting term that describes a company's method of measuring the expense of the assets recorded. Many businesses have procedures on how and when to report purchases and costs as assets or expenses. These are listed on the Balance Sheet as an asset and depreciated as expenses are capitalized. Capitalized expenses make their way to the Income Statement by depreciation.

Thus, the purchases and costs of in-process research and development is capitalized as an asset.