Innovation Biotechnology Limited (IB) is a New Zealand based cancer diagnostic company specialising in the discovery and commercialisation of diagnostic and prognostic tests for better detection and management of cancer.

IB is developing a new test kit for early detection of lung cancer called LCT999. IB spent $3 million researching the demand for LCT999 in 2018.

IB then spent $5 million to work out whether the LCT999 can be kept for at least 1 year in the room temperature in 2019.

As a result of the knowledge gained in the extensive research in 2018 and 2019, IB designed the equipment to produce LCT999. The design phase cost IB $10 million in 2020. It is expected that millions of LCT999 will be sold for at least $100 each over the five-year period between 2021 and 2025.

Required:

Justify with appropriate reference to NZ IAS 38 Intangible Assets how much of the above expenditure would qualify to be shown as an intangible asset.

Answer rating: 100% (QA)

Based on the information given in the case it can be said that expenditure incurred by Innovation Bi... View the full answer