FULL APPLICATION OF THE ACCOUNTING STANDARDS 20. Which of the… FULL APPLICATION OF THE ACCOUNTING STANDARDS20. Which of the following research and development related costs should be capitalized and depreciated over current and future periods?a. Research and development general laboratory building which can be put to alternative uses inthe futureb. Inventory used for a specific research projectc. administrative salaries allocated to research and developmentd. Research findings purchased from another company to aid a particular research project currently in process21. Which of the following principles best describes the current method of accounting for research and development costs?a. Associating cause and effectb. Systematic and rational allocationc. Income tax minimizationd. Immediate recognition as an expense22. How should research and development costs be accounted for?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 management has the intention to capitalized the costs.23. Which of the following costs should be capitalized in the year incurred?a. Research and development costs.b. Costs to internally generate goodwill.c. Organizational costs.d. Costs to successfully defend a patent.e. All of them should be expensed when incurred.24. Which of the following costs would be capitalized?a. Acquisition cost of equipment to be used on current research project only.b. Engineering costs incurred to advance the product to the full production stage.c. Cost of research to determine whether a market for the product exists.d. Salaries of research staff.25. Which of the following costs would not be capitalized?a. Acquisition cost of equipment to be used on current and future research projects.b. Engineering costs incurred to advance the project to the full production stage.c. Cost incurred to file for patent.d. Cost of testing prototype before economic feasibility has been demonstration.26. Which of the following costs should be excluded from research and development expense?a. Modification of the design of a productb. Acquisition of R & D equipment for use on a current project onlyc. Cost of marketing research for a new productd. Engineering activity required to advance the design of a product to the manufacturing stage27. If a company constructs a laboratory building to be used as a research and development facility, the cost of the laboratory building is matched against earnings asa. research and development expense in the period(s) of construction.b. depreciation expense as part of research and development costs.c. depreciation or immediate write-off depending on company policy.d. an expense at such time as productive research and development has been obtained from the facility.28. Operating losses incurred during the start-up years of a new business should bea. accounted for and reported like the operating losses of any other business.b. written off directly against retained earnings.c. capitalized as a deferred charge and amortized over five years.d. capitalized as an intangible asset and amortized over a period not to exceed 20 yearsAccountingBusinessManagerial AccountingLIT 102
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