Intangible Assets—Goodwill and Other Flashcards
- What is R&D?
R&D is s the pursuit of new knowledge and the translation of that knowledge to new products and processes
Key word: NEW
routine activities or activities that do not involve the new product or process are not included
- What types of costs are capitalized for a internally developed patent?
legal fees and other registration costs
R&D cost associated with patent is expensed
Note: if patent purchased for outside party, entire cost of patent is capitalized.
- if company A performs R&D services for company B, which company records the cost as R&D?
company B should record the cost as R&D expense.
company A would accumulate costs incurred and charge them to inventory then expense to COGS at the conclusion of the project.
when you are developing software, what is the line of delineation for when you expense vs. capitalize expense?
R&D costs are expensed until the project reaches technological feasibility. From there forward, cost can be capitalized.
