Question

"Development" costs refer to costs firms incur in developing new products, process and services. They are part of "Research and Development' costs. Which of the following statements is true with respect to accounting for development costs:

Group of answer choices

D. US GAAP and IFRS have the same requirements for development costs.

B. IFRS requires development costs to be expensed as incurred unless addressed by guidance in another IASB Topic.

A. US GAAP requires development costs to be expensed as incurred unless addressed by guidance in another ASC Topic.

C. US GAAP requires development costs to be capitalized when technical and economic feasibility of a project can be demonstrated in accordance with specific criteria, including: demonstrating technical feasibility, intent to complete the asset and ability to sell the asset in the future.

Additionally:

Which of the following is TRUE regarding the convergence between US GAAP and IFRS?

Group of answer choices

A. The main justification for IFRS and US GAAP convergence was a drastic difference between two standards in all of the transactions

D. While convergence is not attainable in the nearest future, the goal to keep US GAAP and IFRS as comparable as possible is still in the FASB and IASB agendas.

C. Convergence will be achieved when IFRS and US GAAP will be completely eliminated and instead the new, superior quality single globally accepted accounting standard will be set up.

B. Convergence will be achieved when the differences in the way GAAP and IFRS account for and report transactions are eliminated.

Answer 1

Answer 1.

The following statement is true

A. US GAAP requires development costs to be expensed as incurred unless addressed by guidance in another ASC Topic.

Generally, under GAAP, research and development costs are expensed as they are incurred, since any future economic benefit arising from development of a given asset is uncertain.

Answer 2.

The following statement is true

D. While convergence is not attainable in the nearest future, the goal to keep US GAAP and IFRS as comparable as possible is still in the FASB and IASB agendas.