Contingencies and Commitments

R&D expense is one of the cleaner rules in GAAP — expense it all, immediately — but AICPA tests the exceptions. The trap: software costs. Pre-technological-feasibility costs are R&D (expense). Post-feasibility costs are capitalized. Candidates mix them up constantly, especially when the question gives you costs at different stages of development. Know exactly where technological feasibility happens for your exam.