The controller

is

correct in his justification with respect to classifying costs as product or period$$ costs; this determination is made by

Generally Accepted Accounting Principles $($GAAP$)$

$.$ Research and$$ development, as well as all costs related to warehousing and distribution of$$ goods, should be classified as

product costs,

and be

reflected as an asset in the balance sheet

$.$

Part $3$