During 2017, Lana Ltd commenced a research and development project on a promising new product. Lana...

 

Transcribed Image Text:

During 2017, Lana Ltd commenced a research and development project on a promising new product. Lana Ltd prepares its financial statements annually on 30 June. The carrying amount of the deferred development costs for this project at 1 July 2018 was S80,000. From 1 July 2018 to 31 December 2018, Lana Ltd incurred $40,000 of research expenditures and capitalized an additional S100,000 of development expenditures (all paid in cash). The project was completed on 31 December 2018 and production started on 1 January 2019. Profitable sales were expected for a total of three years commencing on 1 January 2019. The recoverable amount of the deferred development costs on 30 June 2019 and 30 June 2020 are as follows: 30 June 2020 S70,000 30 June 2019 Recoverable amount $300,000 i) Prepare the required journal entries for Lana Ltd for the year ended 30 June 2019. ii) Prepare the required journal entries for Lana Ltd for the year ended 30 June 2020. ii) Lana Ltd annually spends approximately $100,000 in relation to its internally-generated brand name. Discuss the required treatment of these costs according to AASB 138 Intangible Assets. Include in your answer a discussion on whether this approach is consistent with the AASB Conceptual Framework. During 2017, Lana Ltd commenced a research and development project on a promising new product. Lana Ltd prepares its financial statements annually on 30 June. The carrying amount of the deferred development costs for this project at 1 July 2018 was S80,000. From 1 July 2018 to 31 December 2018, Lana Ltd incurred $40,000 of research expenditures and capitalized an additional S100,000 of development expenditures (all paid in cash). The project was completed on 31 December 2018 and production started on 1 January 2019. Profitable sales were expected for a total of three years commencing on 1 January 2019. The recoverable amount of the deferred development costs on 30 June 2019 and 30 June 2020 are as follows: 30 June 2020 S70,000 30 June 2019 Recoverable amount $300,000 i) Prepare the required journal entries for Lana Ltd for the year ended 30 June 2019. ii) Prepare the required journal entries for Lana Ltd for the year ended 30 June 2020. ii) Lana Ltd annually spends approximately $100,000 in relation to its internally-generated brand name. Discuss the required treatment of these costs according to AASB 138 Intangible Assets. Include in your answer a discussion on whether this approach is consistent with the AASB Conceptual Framework.

Answer rating: 100% (QA)

Ans i Journal entries in the books of Lara Ltd for the period 1st Jul 2018 to 30th Jun 2019 Date Particulars Debit Credit R D Expense To Cash For reco... View the full answer