Explanation

According to accounting standards (specifically IAS 38 - Intangible Assets), costs related to the search for alternative materials in a production process are considered research costs. Research costs are required to be expensed as incurred, not capitalized.

Key Points:

1. Research vs. Development: Accounting standards distinguish between:

   • Research: Original and planned investigation undertaken to gain new scientific or technical knowledge and understanding
   • Development: Application of research findings to plan or design new or substantially improved materials, devices, products, processes, systems, or services

2. Accounting Treatment:

   • Research costs: Must be expensed as incurred
   • Development costs: May be capitalized if certain criteria are met (technical feasibility, intention to complete, ability to use/sell, etc.)

3. Rationale: The search for alternative materials represents the initial investigative phase where the outcome is uncertain. Since there's no assurance that the search will result in identifiable future economic benefits, these costs cannot be capitalized.

4. Correct Answer: Option A is correct because search costs for alternative materials are research costs that must be expensed.

5. Why Other Options Are Incorrect:

   • Option B (must be capitalized): Incorrect because research costs cannot be capitalized under any circumstances
   • Option C (may be capitalized if certain criteria are met): This applies to development costs, not research costs

Note: The question specifically mentions "search" which clearly indicates research activities rather than development activities.