Question

xpenditures for research and development intended to lead to new products of commercial value: Group of answer choices Should be capitalized only if patents are expected to be granted. Should be recorded as intangible assets and amortized during the years in which benefits are expected. None is correct. Should be charged to expense when incurred. Should be classified as deferred charges.

Answer 1

Answer: Should be charged to expense when incurred.

Step-by-step explanation:

Under the GAAP system, Research and Development costs are considered to be period costs. This includes whether or not the company did the R&D themselves or hired another company to do it or purchased their services.

Period costs are to be expensed in the period that they are incurred which is why R&D costs are to be expensed when incurred and reflected in the Income Statement.