Answer:
The correct answers are:
A) Purchase cost of a patent from a competitor. (Capitalized)
B) Research and development costs. (Expensed)
C) Organizational costs. (Expensed)
D) Costs incurred internally to create goodwill. (Expensed)
Explanation:
Basically, for accounting purposes, the difference between capitalization and expenditure relies on the period the assets will be used. When assets are acquired to be used more than in a single period, they are capitalized. When those assets are purchased to be used within part of the current period, they are expensed. Thus:
A) <em>Purchase cost of a patent from a competitor</em>. (Capitalized)
B) <em>Research and development costs</em>. (Expensed)
C) <em>Organizational costs</em>. (Expensed)
D) <em>Costs incurred internally to create goodwill</em>. (Expensed)