Question

Research and development costs should be: A. Expensed in the period incurred. B. Expensed in the period they are determined to be unsuccessful. C. Deferred pending determination of success. D. Expensed if unsuccessful, capitalized if successful.

Answer 1

Answer:

The correct answer is letter "A": Expensed in the period incurred.

Explanation:

Research and Development (R&D) costs are spent on the development of new products that could or could not end up being commercially offered. These kinds of costs are usually expensed at the same time they are incurred. According to the U.S. Statement of Financial Accounting Standards, the R&D costs cannot be capitalized.