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- October 5, 2020 at 7:59 am #587383
During the course of a year Happy Ltd incurred expenditure on many research and development
activities. Details of two of them are given below.
Project AX
To develop a new compound in view of the anticipated shortage of raw material currently being
used in one of the company’s processes. Sufficient progress has been made to suggest that new
compound can be produced at a cost comparable to that of the existing raw material.
Project BX
To improve the yield of an important manufacturing operation of the company. At present
material input with a cost of RM 100,000 p.a becomes contaminated in the operation and half is
wasted. Sufficient progress has been made for the scientists to predict an improvement so that
only 20% will be wasted.
The directors of Happy Ltd consider both projects will be successful. In addition, the company
has enough finances to complete both projects and enough capacity to see both projects through
to successful conclusion.
Cost incurred during the year were:
Project AX BX
RM RM
Staff salaries 15,000 10,000
Overhead (direct cost) 26,000 12,000
Plant on cost (life 10 years) 20,000 60,000Required:
In relation to MFRS138 Intangible Assets,
(a) Define
(i) Research and
(ii) Development
(b) Say under what circumstances it would be appropriate to defer development (capitalize)
expenditure to future periods.
(c) Show how the expenditure on projects AX and BX would be dealt with in the statement of
financial position and statement of comprehensive income in accordance with
MFRS 138 Intangible Assets.October 11, 2020 at 8:18 am #588565Hi,
You cannot just post an entire question and then expect me to answer it for you, the forum does no work like that. You need to attempt the question first and then I can help you with where you’ve gone wrong. Doing it this way is much better for your learning.
If you answer the question above in this thread then I’ll gladly help you out with it.
Thanks
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