In: Accounting
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 | |
$ |