Question

if management was to unethically capitalize costs that should not have been, which of the following would be misstated? (select all that apply.)

Answer 1

Instead of being recorded as an expense during the time it is incurred, capitalized costs are recorded as part of a fixed asset. When a product is anticipated to be consumed over an extended period of time, capitalization is used.

Which costs associated with research and development can be capitalized?

Equipment used in research and development that could be used in other projects or for other purposes can be capitalized.

Which expenses ought not to be capitalized?

Utilities, insurance, office supplies, and any other expense that falls below a certain capitalization threshold are examples of expenses that cannot be capitalized and must be paid for during the current period. Because they are directly related to a specific accounting period, these are categorized as expenses.

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