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b. Systematic and rational allocation
c. Income tax minimization
d. Immediate recognition as an expense
54. How should research and development costs be accounted for,
according to a Financial Accounting Standards Board Statement?
a. Must be capitalized when incurred and then amortized over their
estimated useful lives.
b. Must be expensed in the period incurred.
c. May be either capitalized or expensed when incurred, depending
upon the materiality of the amounts involved.
d. Must be expensed in the period incurred unless it can be clearly
demonstrated that the expenditure will have alternative future uses or
unless contractually reimbursable.
55. Which of the following would be considered research and
development?
a. Routine efforts to refine an existing product.
b. Periodic alterations to existing production lines.
c. Marketing research to promote a new product.
d. Construction of prototypes.
56. Which of the following costs should be capitalized in the year
incurred?