During 2020, Robin Wright Tool Company purchased a building site for its proposed research and development laboratory at a cost of $60,000. Construction of the building was started in 2020. The building was completed on December 31, 2021, at a cost of $320,000 and was placed in service on January 2, 2022. The estimated useful life of the building for depreciation purposes was 20 years. The straight-line method of depreciation was to be employed, and there was no estimated residual value.

Management estimates that about 50% of the projects of the research and development group will result in long-term benefits (i.e., at least 10 years) to the company. The remaining projects either benefit the current period or are abandoned before completion. A summary of the number of projects and the direct costs incurred in conjunction with the research and development activities for 2022 appears below.

Upon recommendation of the research and development group, Robin Wright Tool Company acquired a patent for manufacturing rights at a cost of $88,000. The patent was acquired on April 1, 2021, and has an economic life of 10 years.

Instructions

Under IFRS, how would the items above relating to research and development activities be reported on the following financial statements?

a. The company’s income statement for 2022.

b. The company’s statement of financial position as of December 31, 2022.

Be sure to give account titles and amounts, and briefly justify your presentation.

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Other Expenses Salaries (Excluding and Building of Employee Depreciation Projects Benefits Charges) Number |Completed projects with long-term benefits (costs shown are development costs incurred after achieving economic viability) 15 $ 90,000 $50,000 Abandoned projects or projects that benefit the current period 10 65,000 15,000 Projects in process-results indeterminate 5 40,000 12,000 Total 30 $195,000 $77,000