Med plc is developing a new line of pharmaceuticals and had spent $2m up to 1 January
Question:
Med plc is developing a new line of pharmaceuticals and had spent $2m up to 1 January 20X5. On 1 January 20X5 the board gave approval to fully fund the rest of the project following promising results and spent a further $1m to 1 April 20X5.
On 1 April 20X5 problems were discovered in the trials and approval was not given from the medical regulator for use of the pharmaceuticals. Med plc spent a further $1m to 1 July 20X5, at which point approval was given. From 1 July 20X5 to 1 October 20X5 Med plc spent $4.5m putting the product into the final stage of development. The new pharmaceuticals are expected to generate revenues in excess of $20m and have a useful life of five years.
What is the amount of expenditure capitalised in the financial statements of Med plc for the year ending 1 Oct 20X5?
Managerial economics
ISBN: 978-1118041581
7th edition
Authors: william f. samuelson stephen g. marks