Question

International Financial Reporting Standards are tested on the CPA exam along with U.S. GAAP. The following questions deal with the application of IFRS to accounting for property, plant, and equipment.

Under IFRS:
a) research and development expenditures are expensed in the period incurred.
b) research and development expenditures are capitalized and amortized.
c) development expenditures that meet certain criteria are capitalized and amortized; research expenditures are expensed in the period incurred.
d) research expenditures that meet certain criteria are capitalized and amortized; development expenditures are expensed in the period incurred.

Answer 1

Under IFRS, research expenditures are expensed in the period incurred, while development expenditures are capitalized and amortized.

Step-by-step explanation:

Under International Financial Reporting Standards (IFRS), research and development expenditures are treated differently. Research expenditures that meet certain criteria are expensed in the period incurred, while development expenditures are capitalized and amortized over time.