Question

Which of the following costs incurred internally to create an intangible asset is generally expensed?

a. Research phase costs.
b. Filing costs.
c. Legal costs.
d. All of these choices are correct.

Answer 1

Costs incurred during the research phase of creating an intangible asset are generally expensed under accounting standards since there is no certainty the research will lead to a viable intangible asset.The correct answer is option A.

Step-by-step explanation:

The question is asking which costs incurred internally to create an intangible asset are generally expensed. According to accounting standards, costs during the research phase of an intangible asset are expensed as the research is conducted because there is no guarantee that the research will result in a viable product or patent.

On the other hand, costs incurred during the development phase after the technical and commercial feasibility of the intangible asset has been demonstrated may be capitalized. This means that filing costs and legal costs directly associated with a specific intangible asset which has met these criteria might be capitalized.The correct answer is option A.