During 2012, Medicine Hat Tools Ltd., a Canadian public company, purchased a building site for its product
Question:
Management estimates that about 50% of the development projects will result in long-term benefits (for at least 10 years) to the corporation. The other projects either benefited the current period or were abandoned before completion. A summary of the different projects, their number, and the direct costs that were incurred for development activities in 2014 appears in the table that follows.
Upon recommendation of the research and development group, Medicine Hat Tools Ltd. acquired a patent for manufacturing rights at a cost of $102,500. The patent was acquired on April 1, 2013, and has an economic life of 10 years.
Instructions
(a) How should the items above that relate to product development activities be reported under IFRS on the company's income statement and statement of financial position at December 31, 20 14? Be sure to give account titles and amounts, and briefly justify your presentation.
(b) Outline the criteria that would have to be met for any development costs to qualify as an intangible asset.
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Related Book For
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
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