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Research and development expenditure of $705m was incurred in the period leading to an economic asset of
$4,233m at the year end.(why this amount is adjusted in opening capital employed) as this is related to the period 20×5 not to the opening balance)
Capital employed
At 20X5 year start 19,404
Research and development asset 3,528
Marketing spend capitalised 900
Marketing written-off (100)Adjusted capital employed 23,732
Ifmthere is an asset of 4233 ar year end and 705 of thismwas added during the year, then the b/f cost must have been 4233 – 705 = 3528. If R&D for Eva Is to be capitalised rather than written off the book capital employed at the start of the year must have this amount addded.
sir does this mean that 4233 is total research and development cost till date? if this is the case then it means this asset is already accounted for in opening balance.. question isn’t clear on it. like it does not mention that previously cost is expensed out or it is capitalized like its mention in technical article
The opening balance of capital employed will be from the financial statements and will contain no research asset as that will have been written off when incurred. For EVA book values must be adjusted so that, for example, it was as though research was capitalised rather than being expensed.
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