Questions and Answers
What is the classification of 'investment in a subsidiary company'?
What is the classification of 'Timberland'?
What is the classification of the 'cost of engineering activity required to advance the design of a product to the manufacturing stage'?
What is the classification of 'lease payment'?
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What is the classification of the 'cost of equipment obtained'?
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What is the classification of the 'cost of searching for applications of new research findings'?
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What is the classification of the 'cost incurred in the formation of a corporation'?
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What is the classification of 'operating losses incurred in the start-up of a business'?
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What is the classification of 'training costs incurred in startup of a new operation'?
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What is the classification of the 'purchase cost of a franchise'?
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What is the classification of 'goodwill generated internally'?
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What is the classification of the 'cost of testing in search of product alternatives'?
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What is the classification of 'goodwill acquired in the purchase of a business'?
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What is the classification of the 'cost of developing a patent'?
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What is the classification of the 'cost of purchasing a patent from an inventor'?
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What is the classification of 'legal costs incurred in securing a patent'?
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What is the classification of 'unrecovered costs of a successful legal suit to protect the patent'?
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What is the classification of the 'cost of conceptual formulation of possible product alternatives'?
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What is the classification of the 'cost of purchasing a copyright'?
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What is the classification of 'research and development costs'?
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What is the classification of 'long-term receivables'?
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What is the classification of the 'cost of developing a trademark'?
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What is the classification of the 'cost of purchasing a trademark'?
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Study Notes
Investment Classifications
- Long-term investment includes investments in subsidiary companies.
- Prepaid rent classifies lease payments made in advance.
Property, Plant, and Equipment (PP&E)
- Timberland and equipment costs fall under PP&E classification.
Research & Development (R&D) Expenses
- Costs related to engineering activities for product design transition are categorized as R&D expenses.
- Searching for new applications from research findings incurs R&D expense classification.
- Testing costs for exploring product alternatives are also classified under R&D expenses.
- Developing costs associated with patents is treated as an R&D expense.
- Conceptual formulation costs for possible product alternatives are classified under R&D expenses.
- Research and development overall costs are classified as R&D expenses.
Intangible Assets
- Purchase costs of franchises, patents from inventors, copyrights, and trademarks are classified as intangible assets.
- Goodwill generated from business acquisition is classified as intangible, while internally generated goodwill is not recorded.
- Legal costs incurred for patent security and unrecovered costs from patent litigation qualify as intangible assets.
Other Expenses and Losses
- Costs associated with starting a business, such as operating losses and training costs, are classified as expenses.
- Developing a trademark incurs an expense classification.
Long-Term Receivables
- Long-term investments can also include long-term receivables.
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Test your knowledge of research and development costs with these flashcards. Each card presents a term related to R&D expenses and its classification, helping you understand financial concepts in this area. Perfect for students in finance and accounting.