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Research and Development Costs
Danielson Inc. incurred the following costs during 2016:
Required:
1. Which of the following are included in R&D costs of the current period?
| a. | current-period depreciation expense on the building housing the R&D activities | Research and development |
| b. | cost of a market research study | Not research and development |
| c. | current-period depreciation expense on a machine used in multiple R&D activities | Research and development |
| d. | salary of the director of R&D | Research and development |
| e. | salary of the vice president who spends one-third of her time overseeing the R&D activities | Research and development |
| f. | pension costs for the salaries in Items d and e | Research and development |
2. R&D is expensed as incurred because:
- There is a high degree of uncertainty about which R&D projects will produce benefits and which will not.
- It's easier to implement.
- Expensing all R&D results in greater comparability between companies.
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