Prior to 1974, accepted practice was for companies to either expense or capitalize R&D costs. In 1974,
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Several research studies have been conducted to determine if the standard had any impact on the behavior of companies. One interesting finding was that, prior to 1974, companies that expensed R&D costs were significantly larger than those companies that capitalized R&D costs.
Required:
1. Explain the FASB's logic in deciding to require all companies to expense R& D costs in the period incurred.
2. Identify possible reasons to explain why, prior to 1974, companies that expensed R&D costs were significantly larger than those companies that capitalized R&D costs.
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Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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