Accounting · Financial Reporting Standards (IFRS vs US GAAP)
Under IFRS and US GAAP, which of the following scenarios correctly reflects a key difference in accounting for development costs?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both IFRS and US GAAP capitalize all R&D costs once technical feasibility is established
- 2US GAAP allows capitalization of development costs if related to software, while IFRS prohibits any capitalization
- 3IFRS allows capitalization of development costs when certain criteria are met, while US GAAP typically requires expensing of development costs✓
- 4Both IFRS and US GAAP require all development costs to be expensed as incurred
Correct answer
IFRS allows capitalization of development costs when certain criteria are met, while US GAAP typically requires expensing of development costs
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