Question

Which one of the following is NOT capitalized? a) trademarks b)natural resources c) research and development...

Which one of the following is NOT capitalized?

a) trademarks

b)natural resources

c) research and development costs

d) interest costs during construction periods

e) an expenditure that increases an asset’s useful life

Business   Accounting   
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Homework Answers

Answer #1

Generally, research and development are expensed to income statement.

If company makes expenditure on research and development, through purchased services or by its own through research department, it must record the cost as expense. This should be reflected in debit side of income statement. However, if costs regarding research relates to tangible assets having alternate future use, the cost shall be capitalized.

Hence, correct option is c) research and development costs

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