1. Lex Company is developing a medicine delivery device.  Total expenditures incurred for the project was P8,000,000 of which  P2.800,000 was incurred before July 1, 2021 and P5,200,000 between July 1, 2021 and September 30, 2021.  Lex Company's management team determined that the device will generate probable future economic benefits and achieved technical feasibility on July 1, 2021.

    The amount of development cost capitalized as an intangible asset is:

 

 2. Oliver Company is involved in the distribution of electricity in Queen Estates.  Management was concern about the entity's contribution to forest fires, as the heat generated from its systems have been identified as  a major cause of these fires. Oliver Company's research and technology division is developing an infrared camera that may be attached to a helicopter. The camera is capable of identifying hot-spots in the system and will enable management to take preventive action.

 During 2021, management spent P300,000 to develop the camera.  In a presentation to the BOD on December 20, 2021, the R&D team was able to prove the technical feasibility of the project as to how it could aid the company in reducing repair cost as well as prevent any potential losses due to forest fires. The team, however, has also informed the board that the existence of the technology needed to complete the project is not yet available (pending approval from the government)   

 By June of 2022, management spent an additional P200,000. The R&D team has acquired the technology needed for the camera. The team estimated that it will take another P150,000 to complete the project. The board has only granted P40,000 to the said project.

By October 2022, additional cost of P25,000 was spent on the development of the camera. On this date, the board decided to provide the necessary funds to complete the said project.

By December 11, 2022, after spending an additional P90,000, the camera was set for use.

    The amount capitalized as intangible asset in 2021 is

1.      The amount capitalized as intangible asset in 2022 is

Answer rating: 100% (QA)

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