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Hi John Sir
Can you explain me this..
Which of the following statements is correct?
A Capital expenditure on research must be capitalized and depreciated as normal
B Dividends proposed after the year end must not be accrued in the accounts
C Contingent liabilities should always be provided in the accounts
D Land should be depreciated over 50 yearsThe correct answer is option B
I think option A is also correct… because any capital expenditure on research must be capitalized and depreciated right. So can you explain me why option A is wrong. 🙂
Shahir is correct. It is development expenditure that must be capitalised, not research expenditure.
‘Any capital expenditure on research equipment should be capitalized and depreciated as normal’ this is a statement from Kaplan study text.
Yes – but that relates to the purchase of any tangible non-current assets. They are always capitalised and depreciated whatever the reason for the purchase.
Research is the intangible expenditure (such as the paying of wages to research staff). If it for research it much not be capitalised. If, on the other hand, the wages were paid for development, then they must be capitalised.
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