Which of the following costs would be capitalized? 

a. Acquisition cost of equipment to be used on current research project only. 

b. Engineering costs incurred to advance the product to the full production stage. 

c. Cost of research to determine whether a market for the product exists. 

d. Salaries of research staff.

Which of the following most accurately reflects the concept of depreciation as used in accounting?

A. The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.

B. The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred.

C. An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets.

D. A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved.

Answer rating: 100% (QA)

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