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Hi,
In this question there is a development cost of 300000
For this cost if we are calculating life cycle costs we have to include with total cost.
But here the question was to Produce the budgeted results for the game ‘Stealth’
so here we don’t have to include the development costs as it is sunk cost and according to IFRS these costs have be expensed.
Is my understanding correct?
Thanks.
Yes correct……. it has been excluded but you are correct it doesn’t really explain why it was ignored in annual profit calculations.
However, you can also include it, and then it makes a small profit of 20,000 so you would state whether this is enough is debatable.
As I have said numerous times – write a statement explaining briefly why you have chosen to exclude or include if you are unsure.
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