On December 31 Y1, the Company ARL develop a Product: Master 3D. The disbursement associate to...

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On December 31 Y1, the Company ARL develop a Product: Master 3D. The disbursement associate to the Product are the following: Research S6,000,000 and Development $4,000,000. The criteria have been met for recognition of the development costs as an asset. Product Master D will be in the market in Year 2 and is expected to marketable for 5 years. Total sales of the product are estimated at $100,000,000. Instructions: Using IAS 38, determine the effect of the Research & Development costs have on Company's Net Income. Answer the following questions. 1. Choose one and explain (5 points) Net Income using IFRS will be in Year 1: a. Higher by $_----- larger than U.S. GAAP income. b. Lower by $_ c. Both will be the same. ----- larger than U.S. GAAP income. 2. Explanation: (5 points) 3. Year 3 (ending balance) (5 points) Determine the Book Value of the asset 4. Explanation: (5 points) On December 31 Y1, the Company ARL develop a Product: Master 3D. The disbursement associate to the Product are the following: Research S6,000,000 and Development $4,000,000. The criteria have been met for recognition of the development costs as an asset. Product Master D will be in the market in Year 2 and is expected to marketable for 5 years. Total sales of the product are estimated at $100,000,000. Instructions: Using IAS 38, determine the effect of the Research & Development costs have on Company's Net Income. Answer the following questions. 1. Choose one and explain (5 points) Net Income using IFRS will be in Year 1: a. Higher by $_----- larger than U.S. GAAP income. b. Lower by $_ c. Both will be the same. ----- larger than U.S. GAAP income. 2. Explanation: (5 points) 3. Year 3 (ending balance) (5 points) Determine the Book Value of the asset 4. Explanation: (5 points)

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Step 1 IAS 38 Many business spend vast amount of funds on research and development with the intentio... View the full answer