• Assume that you are the FASB member. Write a memo defending the current standards regarding research and development.

For both groups, your memo should address the following questions:

1. By requiring expensing of R&D, do you think companies will spend less on R&D? Why or why not? What are the possible implications for the competitiveness of U.S. companies?
2. If a company makes a commitment to spend money for R&D, it must believe it has future benefits. Shouldn't these costs therefore be capitalized just like the purchase of any long-lived asset that you believe will have future benefits? Explain your answer.