AJAXs income statements over the last three years report research and development expenses averaging $51.3 million per

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AJAX’s income statements over the last three years report research and development expenses averaging $51.3 million per year. AJAX incurred these expenses to enhance current products and to develop new products in the hope of generating higher future sales. GAAP requires that all such costs be expensed in the year incurred. Consider the following statement:

Research and development expenditures are really assets because they will benefit the future operations of the firm (that is, lead to higher sales).

If you agree, suggest an alternative way to account for research and development expenditures rather than expensing them in the year incurred. If you disagree, what are your reasons?

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