- This topic has 3 replies, 2 voices, and was last updated 3 months ago by
.
- Posts
Merlot Co is engaged in a number of research and development projects during the year ended 31 December 20X5:
Project C – A development project which was completed on 30 June 20X5. Development costs incurred up to 31 December 20X4 were $290,000, with a further $19,800 incurred between January and June 20X5. Production and sales of the new product commenced on 1 September and are expected to last 36 months.
What amount should be expensed to the statement of profit or loss and other comprehensive income of Merlot Co in respect of Project C in the year ended 31 December 2005?
Since the production was completed on June 2005, the expense of $19800 should be written off in the SOPL. Also, the amortization for last 4 months is $34,422. So, my answer is $54,222. But the answer provided is $147,292. Could you please explain how the answer is $147,292?The amortisation should be calculated on (290,000 + 19,800). (The 19,800 are further development costs, not research).
However I have no idea how they have arrived at 147,292. Surely the answer in your book shows their workings?
Please tell me where you found the question so that I can check the wording and the dates.
Thank you for helping me figuring out the mistake I made in this question. I think there is a printing mistake in the answer provided. The question is from Kaplan Exam kit. Objective question number: 215.
- You must be logged in to reply to this topic.