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(Q1)Which of the following accounting principles or conventions is contradictory to the GAAP requirement to expense...

(Q1)Which of the following accounting principles or conventions is contradictory to the GAAP requirement to expense R&D costs immediately?

historical cost

principle comparability

matching principle

conservatism

(Q2)

Which of the following is not a required disclosure regarding intangible assets in the period a company acquires intangible assets?

the rate of return used to estimate the value of goodwill purchased

the cost of any intangible assets acquired, separated into assets subject to amortization, assets not subject to amortization, and goodwill

for assets subject to amortization, the residual value and the weighted-average amortization period

the cost of any research and development acquired and written off, and where it is included in the income statement

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Answer #1

Ques 1

Matching principle

According to matching principle the expense should be recorded in the books of accounts in the same period with the corresponding / matching revenue.According to GAAP R&D expense is expensed immideatley in the books of accounts but the benefit of research say in the form of any intangible asset is derived in the future , even sometimes there may be heavy R & D expense which needs to be recognised but there is no corresponding revenue to match the same. This defeats the matching principle

Ques 2

the rate of return used to estimate the value of goodwill purchased

There are mainly 3 disclosures to be made in financial statements as per US GAAP

(a) for amortizable intangible assets the carrying amount, the amount of any significant residual value, and the weighted-average amortization period,
(b) for intangible assets not subject to amortization the carrying amount
(c) the amount of research and development assets acquired and written off in the period,

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