Under GAAP, which of the following costs are normally expensed in the year incurred, regardless of...

Under GAAP, which of the following costs are normally expensed in the year incurred, regardless of the expected economic benefit?

Group of answer choices

A) Goodwill created as a result of a business combination

B) Software development costs to achieve technological feasibility

C) A patent purchased from an independent third party

Solutions

Expert Solution

Correct answer is option B.

Reasons:-

For option A:- As per GAAP goodwill arising out of business acquisition is capitalized and not amortized.

For option B:-

but cost incurred on software development is expensed off untill technical feasibility is achieved . Expense incurred on software development, after technical feasibility is established, is capitalized .Hence the cost incurred on software development to achieve technical feasibility will be expensed as per GAAP

For option C:- Patent is also capitalized as its value reflects the present value of future economic benefits.

jeff jeffy answered 2 years ago

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