What explanations can you offer for this inconsistency

Reference no: EM132214021

Question :

Under U.S. GAAP, research and development costs are expensed as incurred; however, in the natural resources industry, the cost of finding and developing natural resources (such as crude oil reserves) may be capitalized in the balance sheet under the full cost and successful efforts methods.

Are these methods inconsistent with the general treatment of research and development costs under U.S. GAAP?

What explanations can you offer for this inconsistency in accounting treatment of similar outlays under U.S. GAAP?

Reference no: EM132214021

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