Question
In: Accounting
In the last two years, a company incurred the following expenditure in relation to the development...
In the last two years, a company incurred the
following expenditure in relation to
the development of a new product:
1 Jan 2013 – 31 Dec 2014 (2 years) £1,440,000
The criteria for recognition as an intangible asset were satisfied
from 1 Apr 2014.
For the year end, 31 Dec 2014, the intangible asset will be
recognized in
Statement of Financial Position at?
Solutions
Expert Solution
R&D cost, though it doesn't result in a tangible asset, it's benefit is spread through out the life of the products of the company. So it is only logical and in line with matching concept, that it be capitalised and amortised over the life of the product.
The same is supported by many accounting standards as well. (IFRS, USGAAP, IGAAP etc.)
They generally state a given time period to amortize the full cost (5 years), or if it can be computed to a reasonable accuracy, over any other period.
Under UKGAAP, however it is possible to choose between amortising the cost of R&D as non-current intangible asset and expensing it off.
The period of amortisation in any case starts from the beginning of production
If the ciriteria is satisfied on April 1st, 2014, then till December 31st, 2014, 9 months has elapsed and (as period is not given, taking by default the 5 years)
Amortisation for 2014 = 0.75 years/5 years * £1,440,000 = £216,000 in income statement
So WDV on December 31st, 2014 = £1,224,000 in balance sheet under Non-Current Intangible Asset
[on the other hand, it can all be written off in the income statement if need be]
ekkarill92 answered 1 year agoRelated Solutions
Alpha Corporation has been in business for two years. It incurred the following items last year...
Alpha Corporation has been in business for two years. It
incurred the following items last year (Year 1): Gross profits on
sales 240000 Operating expenses 100000 Long-term capital gain 8000
Short-term capital loss 12000 Alpha reported the following items
this year (Year 2): Gross profits on sales 600,000 Operating
expenses 165,000 Long term capital gain 10000 Compute Alpha’s
taxable income and tax liability for Year 1 and Year 2.
Evaluate the deductibility of expenditure/loss incurred in each of the following cases: Company A placed the...
Evaluate the deductibility of expenditure/loss incurred in each
of the following cases:
Company A placed the sale proceeds it received from a local
customer into a three-months’ time deposit with a bank in Hong
Kong. The account was in Japanese Yen. However, owing to
fluctuation in the exchange rate, it suffered an exchange loss when
converting the deposit back to Hong Kong dollars.
Company B is an international medicine manufacturer. One of its
chief researchers retired and the company paid...
1. Explain how research expenditure and development expenditure should be dealt with in preparing a company...
1. Explain how research expenditure and development expenditure
should be dealt with in preparing a company financial accounts.
Identifying Research and Development Costs Diaz Company incurred the following costs during the year 2020. 1....
Identifying Research and Development Costs
Diaz Company incurred the following costs during the year
2020.
1.
Salaries expense related to design for a trademark with an
indefinite estimated life
$4,800
2.
Materials used for research and development projects for the
current year
8,000
3.
Fees paid to external consultants related to research and
development projects
24,000
4.
Trouble-shooting in connection with breakdowns during
production
14,400
5.
Design of tooling involving new technology
7,200
6.
Cost of equipment (purchased January 2019)...
An airline manufacturer incurred the following costs last month (in thousands of dollars):
An airline manufacturer incurred the following costs last month (in thousands of dollars):
Requirement 1. Assuming the cost object is an airplane, classify each cost as one of the following: direct material (DM), direct labor (DL), indirect labor (IL), indirect materials (IM), other manufacturing overhead (other MOH), or period cost. What is the total for each type of cost? (Enter currency amounts in thousands and not in dollars. If a box is not used in the table leave the box...
A firm has the following information for the last two years – all amounts are in...
A firm has the following information for the last two years –
all amounts are in U.S. dollars.
This
year Last
year
2019 2018
Revenues 99,000 90,000
EBIT 33,000 30,000
EAT 16,500 15,000
EPS 1.80 1.50
This firm’s Degree of Financial Leverage is:
a.
1
b.
3
c.
2
d.
none of the above
The following information on maintenance and repair costs and revenues for the last two years is...
The following information on maintenance and repair costs and
revenues for the last two years is available from the accounting
records at Arnie’s Arcade & Video Palace. Arnie has asked you
to help him understand the relation between business volume and
maintenance and repair cost.
Month
Maintenance and Repair Cost ($000)
Revenues ($000)
July
$2.31
$59.00
August
3.28
53.00
September
2.80
49.00
October
2.21
65.00
November
2.30
77.00
December
1.14
105.00
January
3.12
45.00
February
3.16
51.00
March
3.02
61.00...
The following information on maintenance and repair costs and revenues for the last two years is...
The following information on maintenance and repair costs and
revenues for the last two years is available from the accounting
records at Arnie’s Arcade & Video Palace. Arnie has asked you
to help him understand the relation between business volume and
maintenance and repair cost.
Month
Maintenance and Repair Cost ($000)
Revenues ($000)
July
$1.86
$50.00
August
2.83
44.00
September
2.35
40.00
October
1.76
56.00
November
1.85
68.00
December
0.69
96.00
January
2.67
36.00
February
2.71
42.00
March
2.57
52.00...
The following information on maintenance and repair costs and revenues for the last two years is...
The following information on maintenance and repair costs and
revenues for the last two years is available from the accounting
records at Arnie’s Arcade & Video Palace. Arnie has asked you
to help him understand the relation between business volume and
maintenance and repair cost.
Month
Maintenance and Repair Cost ($000)
Revenues ($000)
July
$1.66
$46.00
August
2.63
40.00
September
2.15
36.00
October
1.56
52.00
November
1.65
64.00
December
0.49
92.00
January
2.47
32.00
February
2.51
38.00
March
2.37
48.00...
The following information on maintenance and repair costs and revenues for the last two years is...
The following
information on maintenance and repair costs and revenues for the
last two years is available from the accounting records at Arnie’s
Arcade & Video Palace. Arnie has asked you to help him
understand the relation between business volume and maintenance and
repair cost.
Month
Maintenance
and Repair Cost ($000)
Revenues
($000)
July
$2.01
$53.00
August
2.98
47.00
September
2.50
43.00
October
1.91
59.00
November
2.00
71.00
December
0.84
99.00
January
2.82
39.00
February
2.86
45.00
March
2.72
55.00...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 1. Why do most leases have expensive cancellation provisions? Does the existence of this provision shift...
- The requirements for your assignment are: Decode the IP address 172.16.31.255 /20 Determine the following: Subnet...
- Examine the various types of contracts available to Toyota when dealing with international suppliers and advise...
- Problem 10-08 NPVs, IRRs, and MIRRs for Independent Projects Edelman Engineering is considering including two pieces...
- Give an example for market segmentation for a new company developing either products for cats or...
- Suppose you have set a specific goal for the balance in your savings account 12 years...
- Explain in very good details the hardening and procedures of Microsoft Server 2019
ADVERTISEMENT