Question

Research and Development Costs

Cressman Company incurred R&D costs for various projects in 2019 as follows:

Materials used for research	$ 250,000
Materials used for development	160,000
Equipment acquired that will have alternative uses in future    research projects for 4 years	2,000,000
Personnel costs of employees involved in research	600,000
Personnel costs of employees involved in development	400,000
Consulting fees paid to outsiders for research	30,000
Consulting fees paid to outsiders for development	100,000
Indirect costs reasonably allocable for research	150,000
Indirect costs reasonably allocable for development	60,000

Required:

1. What is the amount of Cressman's R&D expenses for 2019 if it uses U.S. GAAP?

CRESSMAN COMPANY
2019 Expense Calculations
U.S. GAAP
Materials used in R&D projects	$
Depreciation expense on equipment (straight-line)
Personnel costs
Consulting fees
Indirect costs
	$

2. How would your answer change if Cressman uses IFRS? Assume that the company can demonstrate that the projects are expected to generate future economic benefits.

CRESSMAN COMPANY
2019 Expense Calculations
IFRS
Materials used in research projects	$
Depreciation expense on equipment (straight-line)
Personnel costs
Consulting fees
Indirect costs
	$
Materials used in development projects	$
Personnel costs
Consulting fees
Indirect costs
	$

Answer 1