Peugeot spent €3,775,000 or research and development for a new transmission on its newest models. €1,200,000...

Peugeot spent €3,775,000 or research and development for a new transmission on its newest models. €1,200,000 was research expenses, and the rest was development costs, with 60% of that being incurred after technological feasibility was reached in August 1. Peugeot’s fiscal year begins on February 1. Assume that the new transmission has an economic life of 8 years, at which time it will be replaced by a newer transmission. Give me the journal entries for the 1st and 2nd year for this transmission R&D under IFRS. Show your work.

Expert Solution

The research phase expenditures are charged to the statement of comprehensive income.

Development expenditure is capitalised as an internally generated intangible R&D; only if it meets strict criteria, relating in particular to technical feasibility and generation of future economic benefits.

Expenditure that cannot be classified into these two categories is treated as being incurred in the research phase.

Capitalization ceases and amortization of capitalized development costs begins when the product is available for general release. In the above case it is assumed that new transmission was available for release on August 1, hence expenditure incurred after 1 August will be charged as expense.

ekkarill92 answered 2 years ago

During 2016, Flint Corporation spent $171,360 in research and development costs. As a result, a new...

During 2016, Flint Corporation spent $171,360 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2016, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $45,360 related to the patent were incurred as of October 1, 2016. (1)Prepare all journal entries required in 2016 and 2017 as a result of the transactions above. (Credit account...

During 2013, Bridgeport Corporation spent $148,320 in research and development costs. As a result, a new...

During 2013, Bridgeport Corporation spent $148,320 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2013, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $23,760 related to the patent were incurred as of October 1, 2013. Prepare all journal entries required in 2013 and 2014 as a result of the transactions above. On June...

During 2016, Winston Corporation spent $170,000 in research and development costs. As a result, a new...

During 2016, Winston Corporation spent $170,000 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2016, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $18,000 related to the patent were incurred as of October 1, 2016. Prepare all journal entries required in 2016 and 2017 as a result of the transactions above. (Credit account...

During 2016, Flounder Corporation spent $151,200 in research and development costs. As a result, a new...

During 2016, Flounder Corporation spent $151,200 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2016, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $19,200 related to the patent were incurred as of October 1, 2016. Prepare all journal entries required in 2016 and 2017 as a result of the transactions above. (Credit account...

MiniMe Ltd has spent $250,000 on research and development of a new product. The marketing department...

MiniMe Ltd has spent $250,000 on research and development of a new product. The marketing department estimates that the company can annually sell 200,000 units of the product at $100 each for 4 years. The product will incur $50 per unit in manufacturing costs and fixed costs are expected to be $7 million per year. MiniMe will need to buy manufacturing equipment costing $5 million. The equipment will be depreciated at a CCA rate of 20% and will have a...

During 2019, Sophia Company spent $1,400,000 in research and development costs. As a result of its...

During 2019, Sophia Company spent $1,400,000 in research and development costs. As a result of its R&D activities, Sophia patented a new product on September 30, 2019. On September 30, 2019, Sophia incurred and paid $24,000 of legal costs related to its new patent. The patent had a five-year legal life. Sophia only prepares adjusting journal entries once each year as of 12-31 (year-end). a. Prepare the entries Sophia made in 2019, 2020, and 2021 related to the R&D activities...

During 2010, Salem Company spent $1,360,000 in research and development costs. As a result of its...

During 2010, Salem Company spent $1,360,000 in research and development costs. As a result of its R&D activities, Salem patented a new product on September 30, 2010. On September 30, 2010, Salem incurred and paid $42,000 of legal costs related to its new patent. The patent had a five-year legal life. Salem only prepares adjusting journal entries once each year as of 12-31 (year-end). Prepare the entries Salem made in 2010 related to the R&D activities and the patent. Prepare...

A manufacturer of plastic products spent $2,400,000 during the course of 2004 on research and development....

A manufacturer of plastic products spent $2,400,000 during the course of 2004 on research and development. $800,000 of this was spent on an unsuccessful attempt to design new and cheaper moulds which would have lasted twice as long as the moulds currently in use; this proved impossible because the moulds would not sustain the temperature of the molten plastic. $1,200,000 was spent on a very successful project to enable the gnomes to be cast in a cheaper form of plastic,...

The company X has spent total of $150,000 so far for research and development for this...

The company X has spent total of $150,000 so far for research and development for this product A, and just paid another $100,000 to a consulting firm to do the marketing research. The consulting firm has estimated that the product will have a very short life of only 4 years. It has also estimated that the annual sales volume will be 60,000 units and the selling price is $50 per unit. Further it has predicted that the sales volume of...

The following data represent the 50 companies' percentage of revenues spent on research and development: 13.5...

The following data represent the 50 companies' percentage of revenues spent on research and development: 13.5 8.4 10.5 9.0 9.2 9.7 6.6 10.6 10.1 7.1 8.0 7.9 6.8 9.5 8.1 13.5 9.9 6.9 7.5 11.1 8.2 8.0 7.7 7.4 6.5 9.5 8.2 6.9 7.2 8.2 9.6 7.2 8.8 11.3 8.5 9.4 10.5 6.9 6.5 7.5 7.1 13.2 7.7 5.9 5.2 5.6 11.7 6.0 7.8 6.5 Construct a stem-and-leaf display.

Question