What describes purchased in-process R&D in an acquisition?

• A. R&D that is completed at the time of acquisition
• B. R&D in progress requiring resources to complete
• C. Marketing research that has been funded
• D. R&D inventory value

Answer: (B)

Purchased in-process R&D refers to R&D projects that are still in progress at the acquisition date and will require additional resources to complete. When a company is acquired, these in-progress projects are recognized as intangible assets at their fair value because they represent future potential benefits that the acquiring company can capitalize on once development continues and the project is completed. They are not treated as finished R&D, nor as marketing research, nor as inventory. The asset is typically not amortized until the project is completed (and then amortized over its remaining useful life) and is tested for impairment if conditions suggest it may be worth less.