Why do some say that the GAAP treatment of research and development puts the US at a competitive disadvantage compared to businesses in other countries?
What will be an ideal response?
Answers will vary.
For many years, some thought the companies that followed U.S. GAAP were at a disadvantage when it came to research and development (R&D) costs, because these companies had to immediately expense such costs, while the accounting rules of some other countries allowed R&D costs to be capitalized. Recording costs as an asset-capitalizing it-means that net income is not immediately reduced. The global movement toward using IFRS is reducing, but not eliminating, the different accounting treatments for R&D.
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