A company had $20 million of capitalized development expenditure at cost brought forward at 1 Oct 2007 in respect of products currently in production and a new project began on the same date.
The research stage of the new project lasted until 31Dec2007 and incurred $1.4 million of costs. From that date the project incurred development cost of $800,000 per month. On 1 April 2008 the directors became confident that the project would be successful and yield a profit well in excess of costs. The project was still in development at 30 September 2008. Capitalized development expenditure is amortized at 20% per annum using the straight line method.

What amount will be charged to profit or loss for the year ended 30 September 2008 in respect of research and development costs?

Answer rating: 100% (QA)

Answer 7800000 working and explanation Research cost written off as an expense as incurred Developme... View the full answer