During 2001 N Ltd undertook a research and development project to internally generate a data-analytics tool for searching through large volumes of on-line sales transaction data to identify customer purchasing patterns. The data-analytics tool was completed in December 2001 and is expected to be used for approximately five years before being replaced by a longer-term solution using artificial intelligence.

N Ltd incurred the following costs:

$1,000to obtain technical knowledge to assess the scope and feasibility of the project

$4,000salaries paid to software engineers and data analysts to design, develop and test the data-analytics tool

$500 on staff training costs to teach staff how to use the data analytics tool

The bookkeeper was not sure how to account for the costs incurred in the project and accumulated all the costs in the Data-Analytics Tool Project account.

Required

a) What is themainaccounting policy issue (or issues) that need to be resolved in relation to the Data-Analytics Tool Project account?

b) Identify the Accounting Standard that is most relevant to the case.

c) Identify two principles or rules from the Accounting Standard identified in part b) that are relevant to the accounting policy issue and explain why they are relevant.