Question

In the cash flow information for the ping kings project, ping spent $300,000 for research and development of the golf clubs. Ping's tax rate is 25%. How much of this cost should be included in the initial (t = 0) cash flow for this project?.

Answer 1

The initial (t = 0) cash flow for the Ping Kings' Project should account for $300,000 of the expenditure.

Should the costs of research and development be capitalized?

For the majority of businesses, research and development is an investment that will pay off over a number of years in terms of revenue, cash flow, and profit; as a result, it should ideally be capitalized as an asset rather than expensed.

Research and development costs are regarded as sunk costs under U.S. GAAP and should not be capitalized.

Why is R&D a cost rather than a capital expense?

The major reason businesses aren't allowed to capitalize their R&D expenses is because it's impossible to accurately estimate the charges' potential return on investment. Research and development involves a lot of trial and error.

Learn more about sunk costs: https://brainly.com/question/29488541

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