Prior to beginning work on this assignment, read Chapter $4$ and review Case $4-1$ Jaguar Land Rover PLC in your course text.

Complete Requirements $1,2,$ and $3$ of the case. Summarize your results and conclusions supporting your conclusions with key concepts from the weekly reading including:

$$ Comparison of the capitalization ratios of JLR with those of German automakers profiled in Exhibit $4\mathrm{.}4$ in the textbook.

$$ Evaluation of capitalized product development costs including an analysis of the accounting policy footnote disclosures.

$$ Discussion of key financial statements figures presented under the requirements of U$.$S$.$ GAAP compared with the figures presented using IFRS.

Requirement $1$: What percentage of R&D expenditures was capitalized during the fiscal year ending March $31,2017?$ How does this percentage compare with the capitalization ratios of the German automakers profiled in Exhibit $4\mathrm{.}4?$

Requirement $2$: Estimate the average useful life of product development costs by dividing average capitalized product development costs by the amortization expense for fiscal $20162017.$ Compute average capitalized product development costs as simple average balances at the beginning and end of each fiscal year. Does your estimate fall within the range of the useful lives for development costs disclosed in the accounting policy footnote?

Requirement $3$; The table below contains metrics as reported in JLR$$s three primary financial statements. Convert these metrics to a U$.$S$.$ GAAP basis. Where necessary assume that JLR$$s tax rate is $21\mathrm{.}1$ percent, a rate disclosed in Footnote $14,$ Taxation.

Case $4-1$

Jaguar Land Rover Automotive PLC $($JLR$)$ is a maker of luxury autos based in Coventry, United Kingdom. JLR uses IFRS and has a fiscal year$-$end of March $31.$ You have been asked to use your knowledge of IFRS to convert key metrics for the company to a U$.$S$.$ GAAP basis. For simplicity, you may assume that the only material differences between JLR$$s as$-$reported numbers and those it would report under U$.$S$.$ GAAP are traceable to its policy of capitalizing development costs.

Internally Generated Intangible Assets $($from Footnote $2,$ Accounting Policies$)$

Research costs are charged to the consolidated income statement in the year in which they are incurred. Product development costs incurred on new vehicle platforms, engines, transmission and new products are recognised as intangible assets$$when feasibility has been established, the Group has committed technical, financial and other resources to complete the development and it is probable that the asset will generate future economic benefits. The costs capitalised include the cost of materials, direct labour and directly attributable overhead expenditure incurred up to the date the asset is available for use. Interest cost incurred is capitalised up to the date the asset is ready for its intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset. Product development cost is amortised over a period of between two and ten years. Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment loss, if any. Amortisation is not recorded on product development in progress until development is complete.Research and Development $($from Footnote $11)$

Intangible Assets $($selections from Footnote $18)$

Required:

What percentage of R&D expenditures was capitalized during the fiscal year ending March $31,2017?$ How does this percentage compare with the capitalization ratios of the German automakers profiled in Exhibit $4\mathrm{.}4?$

within the range of the useful lives for development costs disclosed in the accounting policy footnote?