In 2016, SaulGroup spent $1 million in developing Product Y. Of this amount, 30% related to development

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In 2016, SaulGroup spent $1 million in developing Product Y. Of this amount, 30% related to development cost (IAS 38 criteria had been met for recognition of the development costs as an intangible asset). The development of Product Y was complete, and the product was available for sale on January 2, 2017. Sales of the product are expected to continue for five years. Straight-line method is used.

a. What is the impact the research and development costs have on SaulGroup’s in 2016 and 2017 income under (1) IFRS and (2) U.S. GAAP?

b. How would you explain the difference in income, total assets, and total stockholders’ equity related to Product Y using IFRS and U.S. GAAP over the year 2016 and 2017?

Posted Date: Nov 10, 2021 01:32 AM

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In 2016, SaulGroup spent $1 million in developing Product Y. Of this amount, 30% related to development

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Expert Answer:

a Research costs are expensed under both IFRS and US GAAP Development cost are capitalised under IFR... View the full answer

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