Oakville Corp. incurred the following costs during 2020 in connection with its research and development phase activities:
Cost of equipment acquired for use in research and development projects over the next
five years (straight-line depreciation used) ........................................................................... $240,000
Materials consumed in research projects ................................................................................. 61,000
Materials consumed in the development of a product committed for manufacturing in
the first quarter of 2021 .............................................................................................................. 32,000
Consulting fees paid in the last quarter of 2020 to outsiders for research and development
projects, including $4,500 for advice related to the $32,000 of materials used above ....... 95,000
Personnel costs of persons involved in research and development projects .................... 108,000
Indirect costs reasonably allocated to research and development projects ........................ 25,000
General borrowing costs on the company’s line of credit ....................................................... 12,000
Training costs for a new customer service software program ................................................ 17,500

Instructions

a. Calculate the amount to be reported as research and development expense by Oakville on its income statement for 2020. Assume the equipment is purchased at the beginning of the year. Assume the company follows IFRS for financial reporting purposes.

b. Explain the treatment of training costs and borrowing costs incurred after the six development phase capitalization criteria are met.

c. Explain how the answer may be the same or differ if ASPE were followed.