Do you think the fact that most costs under U.S. GAAP have to be expensed instead of capitalized places U.S. companies a...
Do you think the fact that most costs under U.S. GAAP have to be expensed instead of capitalized places U.S. companies at a disadvantage?
Homework Answers
Expensing most cost under US GAAP than capitalizing does not place US companies at a disadvantage because:-
1. Total Net Income remains the same because capitalizing only create timing difference.
2. Return on Equity and Return on Assets will be higher in the future.
3. Initially, companies can handle lower profits, but it will bounce back in later years, which shows an upward graph of earning for the future.
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Do you think the fact that most costs under U.S. GAAP have to be expensed instead of capitalized places U.S. companies a...
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Under U.S. GAAP, research and development costs are expensed as incurred; however, in the natural resources industry, the cost of finding and developing natural resources (such as crude oil reserves) may be capitalized in the balance sheet under the full cost and successful efforts methods. Are these methods inconsistent with the general treatment of research and development costs under U.S. GAAP? What explanations can you offer for this inconsistency in accounting treatment of similar outlays under U.S. GAAP?
Under U.S. GAAP, research and development costs are expensed as incurred; however, in the natural resources...
Under U.S. GAAP, research and development costs are expensed as incurred; however, in the natural resources industry, the cost of finding and developing natural resources (such as crude oil reserves) may be capitalized in the balance sheet under the full cost and successful efforts methods. Are these methods inconsistent with the general treatment of research and development costs under U.S. GAAP? What explanations can you offer for this inconsistency in accounting treatment of similar outlays under U.S. GAAP?
Under U.S. GAAP, research and development costs are expensed as incurred; however, in the natural resources...
Under U.S. GAAP, research and development costs are expensed as incurred; however, in the natural resources industry, the cost of finding and developing natural resources (such as crude oil reserves) may be capitalized in the balance sheet under the full cost and successful efforts methods. Are these methods inconsistent with the general treatment of research and development costs under U.S. GAAP? What explanations can you offer for this inconsistency in accounting treatment of similar outlays under U.S. GAAP?
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