Costs Associated with Specific Revenues - CFA® Level 1 Exam Preparation

Costs Associated with Specific Revenues

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Question

Costs that can be reasonably associated with specific revenues but not with specific products should be

Answers

A. capitalized and then amortized over a period not to exceed 60 months.

B. expensed in the period in which the related revenue is recognized.

C. capitalized and then amortized over a period not to exceed 40 years.

D. allocated to specific products based on the best estimate of the production processing time.

E. charged to expense in the period incurred. B

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Explanations

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A. B. C. D. E.

Explanation

The expense recognition principle of "associating cause and effect" or "matching" applies when a direct cause and effect relationship can be demonstrated between costs and particular revenues.

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