Discussion Topic

Prior to $1974,$ accepted practice was to either expense or capitalize R&D costs. In $1974,$ FASB issued a standard that

requires all research and development costs to be expensed as incurred. This was a controversial standard that was

opposed by many companies who preferred delaying the recognition of these expenses until later years when

presumably these expenditures provided a benefit to the business.

Explain why FASB might have decided to require all companies to expense R&D costs in the period incurred.