Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

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Multiple Choice

Under U.S. GAAP, the cost of research and development performed for others is capitalized and recorded as:

Deferred revenue

A receivable

Research and development expense

An intangible asset

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Verified step by step guidance

Understand the context of the question: Under U.S. GAAP, research and development (R&D) costs are treated differently depending on whether the R&D is performed for the entity itself or for others. This question specifically addresses R&D performed for others.

Clarify the accounting treatment for R&D performed for others: When an entity performs R&D for others, the costs incurred are not expensed immediately. Instead, they are recorded as a receivable because the entity expects reimbursement from the party for whom the R&D is performed.

Review the definition of a receivable: A receivable is an asset that represents an amount owed to the entity by another party. In this case, the receivable arises because the entity has performed R&D services and expects payment for those services.

Eliminate incorrect options: Deferred revenue refers to payments received in advance for services not yet performed, which does not apply here. Research and development expense applies to R&D performed for the entity itself, not for others. An intangible asset refers to non-physical assets like patents or trademarks, which is unrelated to this scenario.

Conclude the correct accounting treatment: Based on U.S. GAAP, the cost of R&D performed for others is capitalized and recorded as a receivable, reflecting the expectation of reimbursement from the party for whom the R&D was conducted.