Research and development expense

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    Topic
  • October 4, 2015 at 8:30 pm #197346
    NinaSun
    Member

    Brill Co. made the following expenditures during the current year:

    Cost to develop computer software for use in:

    Cost to develop computer software for use in Brill’s general management information system $100,000

    Cost of market research activities $75,000

    What amount of these expenditures should Brill report in its current year income statement as research and development expense under U.S. GAAP?

    a. $75,000

    b. $0

    c. $100,000

    d. $175,000

    The answer is “b”. Becker’s book says “Expense costs incurred for the preliminary project state and costs incurred for training and maintenance.” I think Expense here means R&D expense. Am I right? This question didnt mention whether the development cost happen after Technological feasibility. It is hard for me to choose. If choose “b” I think it should because it happened after technological feasibility, but not because of for internal use, which is explained in Becker. Can anyone explain why “b” is right?

    AUD-74,75 11/2014
    REG-80 04/2015
    FAR-74, 91 11/2015
    BEC-79 08/2015

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