ABC Ltd has following Research & Development projects under process during current financial years: Project No....

 

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ABC Ltd has following Research & Development projects under process during current financial years: Project No. 1: Started and completed last year and cost capitalized was Rs. 500,000. This project will reduce the production cost and expected savings in coming 5 years is as follow Year 2 3 4 5 Total Savings in Production Cost Rs. 100,000 Rs. 200,000 Rs. 400,000 Rs. 300,000 Rs. 100,000 Rs. 1,100,000 Project No. 2: Started last year and following expenses were incurred Equipment of Rs. 200,000 (useful life of the equipment is 5 years) Other expenses Rs. 100,000. However, the project will not be completed during the current financial year. Project No. 3: Started last year but completed in current financial year. Expenses of Rs. 200,000 were expensed out last financial year and total ecpenses incurred during current financial year are Rs. 400,000. Required: Suggest treatment as per IAS 38 in the financial statements of the company. ABC Ltd has following Research & Development projects under process during current financial years: Project No. 1: Started and completed last year and cost capitalized was Rs. 500,000. This project will reduce the production cost and expected savings in coming 5 years is as follow Year 2 3 4 5 Total Savings in Production Cost Rs. 100,000 Rs. 200,000 Rs. 400,000 Rs. 300,000 Rs. 100,000 Rs. 1,100,000 Project No. 2: Started last year and following expenses were incurred Equipment of Rs. 200,000 (useful life of the equipment is 5 years) Other expenses Rs. 100,000. However, the project will not be completed during the current financial year. Project No. 3: Started last year but completed in current financial year. Expenses of Rs. 200,000 were expensed out last financial year and total ecpenses incurred during current financial year are Rs. 400,000. Required: Suggest treatment as per IAS 38 in the financial statements of the company.

Answer rating: 100% (QA)

IAS 38 the International Accounting Standard on Intangible Assets provides guidance on the recognition measurement and disclosure of research and deve... View the full answer