[Mufadhal]

The question comes from BPP practice & Revision Kit 2022-2023, Question 128.

[Mufadhal]

67 Pass

[Mufadhal]

Alright, thank you so much.

[Mufadhal]

I am also struggling with this question……. I understand that we have to expense the development cost till it meets the “PIRATE” criteria then we capitalize any followed development cost which will be subjected to amortization…

However, looking at the answer sheet, it says that the answer is C $7,800,000 (without including the amortization of the 6 months capitalized cost).

The options are:

a) 8,280,000
b) 6,880,000
c) 7,800,000
d) 3,800,000

Please help us. I believe the answer should be A $8,280,000 as follows:

Research cost 1.4 million

Expenced development cost
Jan, Feb Mar (3*0.8) 2.4 million

Amortization cost (20*0.2) 4 million

Amortization cost for the
6 months( (0.8*6*0.2* 6/12) 0.48 million

Total 8.28 million

[Mufadhal]

This question came in the BPP workbook; Chapter 17, Activity 3.

[Mufadhal]

Well understood. thank you so much.

[Author]

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