[amanda455]

Hi, I am having difficulties in solving this question as I don’t know how much to capitalise for each year and how should the amortised amount be for each year. Could I get some guidance for this kind of questions?

R&D costs in 2011: $50Mil , 2012: $55Mil, 2013: $60Mil, 2014: $65Mil and 2015: $70Mil

If the accountant decides to reflect the underlying economic reality of the company and deems that 80% of its R&D outlay in each year should be capitalised and amortised at the beginning of the following year over a four year period, how can we compute the effects of capitalising R&D costs on the company’s income statement and balance sheet for FY2015? Applicable tax rate = 20%

Thank you so much!

[Author]

Posts