- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 23. Long-lived Assets
- Subject 2. Intangible Assets
CFA Practice Question
Which of the following reflects the proper accounting treatment of internally developed patents?
B. Expense as a non-operating item under other expenses and losses
C. Capitalize as an intangible asset and amortize
A. Expense immediately as research and development costs
B. Expense as a non-operating item under other expenses and losses
C. Capitalize as an intangible asset and amortize
Correct Answer: A
Patent development costs are considered research and development costs, and are expensed as incurred.
User Contributed Comments 5
| User | Comment |
|---|---|
| achu | INTERNAL - key word here. |
| swisha | ^^good catch |
| Shaan23 | Again I guess we're assuming GAAP.... |
| mmccoy | GAAP is assumed unless stated otherwise |
| khalifa92 | all internally developed are expenses other than IFRS one exception. |