• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! Lectures for ACCA AAA September 2022 Exams are now available >>

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

Development expenses

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Development expenses

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 13, 2021 at 2:27 pm #625164
    alawi sayed
    • Topics: 138
    • Replies: 148
    • ☆☆☆

    Hello Mr Chris,

    In the case below why they consider the development cost as expense and depending on what we can start capitalizing the development cost taking the directors decision into consideration.

    Thanks,

    Assoria Co had $20 million of capitalised development expenditure at cost brought forward at
    1 October 20X7 in respect of products currently in production and a new project began on the same date.
    The research stage of the new project lasted until 31 December 20X7 and incurred $1.4 million of costs.
    From that date the project incurred development costs of $800,000 per month. On 1 April 20X8 the directors
    of Assoria Co became confident that the project would be successful and yield a profit well in excess of
    costs. The project was still in development at 30 September 20X8. Capitalised development expenditure is
    amortised at 20% per annum using the straight-line method.
    What amount will be charged to profit or loss for the year ended 30 September 20X8 in respect of research
    and development costs?
    A $8,280,000
    B $6,880,000
    C $7,800,000
    D $3,800,000

    June 19, 2021 at 7:39 am #625762
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6115
    • ☆☆☆☆☆

    Again, you need to attempt the question first. Remember research costs are expensed through profit and loss, plus the so called development costs can only start to be capitalised once it is highly probable that future economic benefits will be received. Up until that point then the costs will also be written off through profit or loss.

    Thanks

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on The management of receivables – Simple settlement discount – ACCA Financial Management (FM)
  • ty0311 on The management of receivables – Simple settlement discount – ACCA Financial Management (FM)
  • Manuga on ACCA AB Chapter 18 – The nature of communication – Questions
  • Manuga on MA Chapter 17 Questions Budgeting
  • Manuga on Budgeting part 4 – Cash Budgets – ACCA Management Accounting (MA)

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy