1. A company had Rs. 20 million of capitalised development expenditure at cost brought forward at...

 

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1. A company had Rs. 20 million of capitalised development expenditure at cost brought forward at 1 October 2017 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 31 December 2017 and incurred Rs. 1.4 million of costs. From that date the project incurred development costs of Rs. 800,000 per month. On 1 April 2018 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 2018. Capitalised development expenditure is amortised at 20% per annum using the straight-line method. What amount will be charged to profit or loss for the year ended 30 September 2018 in respect of research and development costs? 2. ABC has spent Rs. 600,000 researching new cleaning chemicals in the year ended 31 December 2020. They have also spent Rs. 200,000 developing a new cleaning product which will not go into commercial production until next year. The development project meets the criteria laid down in IAS 38 Intangible Assets. How should these costs be treated in the financial statements of ABC for the year ended 31 December 2020? 1. A company had Rs. 20 million of capitalised development expenditure at cost brought forward at 1 October 2017 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 31 December 2017 and incurred Rs. 1.4 million of costs. From that date the project incurred development costs of Rs. 800,000 per month. On 1 April 2018 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 2018. Capitalised development expenditure is amortised at 20% per annum using the straight-line method. What amount will be charged to profit or loss for the year ended 30 September 2018 in respect of research and development costs? 2. ABC has spent Rs. 600,000 researching new cleaning chemicals in the year ended 31 December 2020. They have also spent Rs. 200,000 developing a new cleaning product which will not go into commercial production until next year. The development project meets the criteria laid down in IAS 38 Intangible Assets. How should these costs be treated in the financial statements of ABC for the year ended 31 December 2020?

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