Final answer:
Expensing all R&D costs associated with internally created intangible assets can result in immediate recognition of expenses on the income statement. However, it can create positive externalities by promoting innovation, technological advancement, and knowledge creation.
Step-by-step explanation:
Expensing all R&D costs associated with internally created intangible assets can result in immediate recognition of expenses on the income statement. This means that the company's profitability may be reduced in the short term as the R&D costs are deducted from revenue. However, in the long term, it can create positive externalities by promoting innovation, technological advancement, and knowledge creation.
For example, by expensing R&D costs, companies are encouraged to invest more in research and development activities to stay competitive. This leads to the development of new products, processes, and technologies that can benefit society as a whole. It also stimulates economic growth by attracting investments and creating new job opportunities.
Overall, expensing R&D costs can have a positive impact on a company's future growth and competitiveness, as well as contribute to the broader innovation ecosystem.