Question

R&D expense is treated as an operating expense, not a capital expenditure, unless the assets have an alternative future use.

a. True
b. False

Answer 1

False. R&D expense is generally treated as a capital expenditure, not an operating expense, unless the assets have an alternative future use.

Step-by-step explanation:

False. R&D expense is generally treated as a capital expenditure, not an operating expense. This is because R&D activities often result in the creation of intangible assets, such as patents or copyrights, which can have future economic benefits. These assets can be used for alternative future purposes besides the specific project they were initially developed for. However, if an R&D expense does not result in the creation of an asset with alternative future use, it would be treated as an operating expense.