NXS Semiconductor prepares its financial statements according to International Financial Reporting Standards. The company incurred the following

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NXS Semiconductor prepares its financial statements according to International Financial Reporting Standards. The company incurred the following expenditures during 2018 related to the development of a chip to be used in mobile devices:
Salaries and wages for basic research ............................... $3,450,000
Materials used in basic research ...................................... 330,000
Other costs incurred for basic research .............................. 1,220,000
Development costs ..................................................... 1,800,000
Legal and filing fees for a patent for the new technology ........ 50,000
The development costs were incurred after NXS established technological and commercial feasibility and after NXS deemed the future economic benefits to be probable. The project was successfully completed, and the new chip was patented near the end of the 2018 fiscal year.
Required:
1. Which of the expenditures should NXS expense in its 2018 income statement?
2. Explain the accounting treatment of the remaining expenditures.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Intermediate Accounting

ISBN: 9781259722660

9th Edition

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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