In 1974, the FASB considered requiring the expensing of all in-houseresearch and development (R&D) expenditures. The Board received manycomments predicting that if firms were required to expense R&D,they would significantly cut back on research expenditures to avoidhurting reported earnings. Subsequent to the adoption ofpre-Codification FASB Statement No. 2, such an impact proved to bedifficult to document.What are the pros and cons ofexpensing R & D, and what effect would such policy have on currentand future expenditures? Why does the accounting profession make adistinction between internally created intangibles and purchasedintangibles? How are these intangibles accounted?
