Consider two options.

Option 1: The accounting standard allows a company to capitalise (record as an asset) the portion of research and development

(R&D expenditure that has future benefits to the company. An accountant uses professional judgment to determine the amount of R&D to capitalise. The remaining amount is recorded as an expense.

Option 2: The accounting standard requires a company to record all R&D expenditure as an expense.

Do you think that Option 2 will produce accounting information with higher quality? Explain your answer. Give an example to elaborate your points where appropriate.