Chapter 26 practice question 2mcq

But it was only from May 31 that the directors announced their confidence in the viability of the project so only 2 months may be deferred as development expenditure OK?

So it should be 5m + 5m ÷ 3 = 33333333. Is it the right approach. Why is it divided by 3. Or have I taken the wrong approach to the answer. If no, can you be explicit. Thabks

I don't think I am clear on this question.can you also help on how this should be amortized

"So it should be 5m + 5m ÷ 3 = 33333333. Is it the right approach. Why is it divided by 3. Or have I taken the wrong approach to the answer. If no, can you be explicit. Thabks" - The directors declared viability just 2 months before the year end Expenditure is at the rate of $5m per quarter So 2 months is $3,333,333 And there's NO amortisation because development work is still in progress - therefore no income is being generated against which to match any amortisation Better?

Thanks! Now I understand. Development expenditure shouldn't be amortized until completed

Until it's generating income against which you can set the expense, yes