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Merlot Co is engaged in a number of research and development projects:
Project A A project to investigate the properties of a chemical compound. Project B A project to develop a new process which will save time in the production of widgets. This project was started on 1 January 20X5 and met the capitalisation criteria on 31 August 20X5. Project C A development project which was completed on 30 June 20X5. Related costs in the statement of financial position at the start of the year were $290,000. Production and sales of the new product commenced on 1 September and are expected to last 36 months. Costs for the year ended 31 December 20X5 were as follows: $ Project A 34,000 Project B costs to 31 August 78,870 Project B costs from 31 August 27,800 Project C costs to 30 June 19,800
What amount is expensed to the statement of profit or loss and other comprehensive income of Merlot Co in respect of these projects in the year ended 31 December 20X5?Sir can you please clarify me one thing in this qustion why we will not charge full year amortization on 290000 why we include only 4 months amortization on 290000 ?
Production and sales of the new product started on 1 September. The amortisation is charged so as to match the revenue – from 1 September to 31 December is 4 months.
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