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Which of the following should be classified as development costs?
1) Braynee Co has spent $300,000 investigating whether a particular
substance, flubber, found in the Amazon rainforest is resistant to heat.2) Cleverclogs Co has incurred $120,000 expenses in the course of making a new waterproof and windproof material with the idea that it will be used for ski-wear
3) Ayplus Co has found that a chemical compound, known as XYX, is not harmful to the human body.
4) Braynee Co has incurred a further $450,000 using flubber in creating prototypes of a new heat-resistant suit for stuntmen.
A All of them
B 1 and 3
C 2 and 4
D 2 onlyAnswer is B. I did C.
Can you explain sir? I thought 1 and 3 are research costs.Where did you find this question? Are you sure it does not say which of the following should not be classified as development costs? 🙂
The correct answer for the question as you have typed it it indeed C. (Although even though these would be classified as development costs, they would not be capitalised because there is no mention of the conditions for capitalisation being fulfilled).
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