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Research & Development Cost Capitalization under different Accounting Standards Answer

Research & Development Cost Capitalization under different Accounting Standards Answer

Research & Development Cost Capitalization under different Accounting Standards Answer

 

Research & Development Cost Capitalization under different Accounting Standards
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As per the US GAAP # SFAS 2 developed by FASB states that research & development cost for any project are those costs that are incurred during the research , development , designing & building a new product or incurred during a project.
Any cost that is incurred for the purpose of market & other research, materials consumed during the design & development phase should be expensed in the period in which they are incurred. Development cost can only be capitalized if the equipment purchased or the developed equipment or product can be used for other alternative projects or purpose. IF they are specified in nature and can only be utilized on the success of the current project which is in the development stage than that amount of expenditure on those equipment should be also be expensed out.
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Research & development cost definition & treatment as per SFAS 2

Matching Principle

Application of the above mentioned concepts in our case study

 

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Research & Development Cost Capitalization under different Accounting Standards

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