Practice prompt · Q:intangibles-research-software-and-goodwill/research-and-development-default-001

Route research and development spending

Tests whether the learner applies the expense default and the exception for equipment with alternative future use.

Updated Sep 11, 2026 Review due Nov 18, 2026

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During the year a company spends 1,800,000 on salaries for a research team. It spends 400,000 on a machine usable only on the current project. It spends 650,000 on general-purpose lab equipment with a six-year life that will serve later projects too.

The supplied alternative-future-use facts separate the two equipment items in this bounded task. The general-purpose equipment is capitalized and depreciated over its useful life; depreciation used in R&D is an R&D cost. The single- project machine has no supported alternative future use and is charged to R&D. See ASC 730-10-25-2.

Choose the best answer. a Expense 2,200,000 and capitalize 650,000, depreciating it and charging the depreciation to research and development. b Expense all 2,850,000, because research and development costs are expensed as incurred. c Capitalize 1,050,000 of equipment and expense 1,800,000 of salaries. d Expense 1,800,000 and capitalize 1,050,000, amortizing it over the project.

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Answer: a

Choice a. Expense 1,800,000 plus 400,000; capitalize 650,000 and depreciate it into research and development expense.