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I am confused with this note:
Minny is a parent company and it purchased patents of $10 million to use in a project to develop new products on 1 December 2011. Minny has completed the investigative phase of the project, incurring an additional cost of $7 million and has determined that the product can be developed profitably. An effective and working prototype was created at a cost of $4 million and in order to put the product into a condition for sale, a further $3 million was spent. Finally, marketing costs of $2 million were incurred. All of the above costs are included in the intangible assets of Minny. The year end of Minny is 30 November 2012.
I want to understand the adjustments in consolidated financial statements conceptually“investigative phase of the project, incurring an additional cost of $7 million” is research and is expensed in the year in which it is incurred
“marketing costs of $2 million were incurred” is not a development expense
So $9m needs to be removed from INCA and charged to the Profit or Loss
OK?
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