On its income statement for the current year, the National Corporation reported an expense for research and development of $522 million. What information is conveyed by this balance?

• It is an amortization expense associated with patents, copyrights, and other intangible assets.

• It is the amount spent on all research and development activities during the year.

• It is the amount spent on all projects that did not result in at least 50 percent viability during the year.

• It is an amount paid on all product development that failed during the year.