A company performs extensive research in development for a new drug under gap. Most R&D cost are expense as incurred what is the ethical justification for this accounting treatment, even if it results in lower reported profits, and early stages of a project? A it simplify the accounting process reducing complexity for small businesses be it allows management more flexibility, and financial reporting. It appears to the conservation principle by recommending expenses when incurred to the uncertainty, your future economic benefits, and ensure a company avoid paying higher taxes in the short term.