Final answer:
R&D costs are expensed under both GAAP and IFRS. Under GAAP, costs are expensed as incurred except for certain tangible assets. Under IFRS, research costs are expensed while development costs may be capitalized if they meet certain criteria. Therefore, the correct answer is c) expensed under both GAAP & IFRS
Step-by-step explanation:
The treatment of Research and Development (R&D) costs can vary between the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS).
Under GAAP, R&D costs are generally expensed as they are incurred. The only exception would be if the R&D costs result in a tangible asset with a future economic benefit, in which case they could be capitalized. On the other hand, under IFRS, R&D costs are treated a bit differently.
R&D under IFRS is divided into two stages: the research phase and the development phase. All research costs are expensed as they are incurred.
However, development costs can be capitalized if certain criteria are met. This would include, among other things, an intention to complete and an ability to use or sell the resulting product, how the asset will generate probable future economic benefits, the availability of adequate resources to complete the development, and the ability to measure reliably the expenditure attributable to the product.
Conclusion
Therefore, the correct answer is c) expensed under both GAAP & IFRS, albeit with different conditions and nuances in the treatment of development costs under IFRS.