In addition to the information provided in Activity 22.3, you are informed that, besides depreciation of equipment, further development costs of £36,000 were incurred in 2012 by Able plc on the same project up to the date of launch of the medication on 30 April 2012. The commercial viability of the product is estimated to be five years.

Required:

(a) Show how these transactions will be reported on the Statement of income for the year ended 31 December 2012 and the Statement of financial position as at that date.

(b) On 1 January 2013 it was learnt that because of an alternative product launched by a rival, the recoverable amount of the product launched by Able is estimated at £200,000 on this date and the commercial life of the product two years from that date. How will these developments be reported on Able plc’s financial statements in the year ended 31 December 2013?

(c) By January 2014, the rival product was discredited and on that basis, the recoverable amount from Able plc’s product was revised to £160,000 and the useful life expected to last until the end of December 2017. How will the development cost feature in the Statement of income for the year ended 31 December 2014 and the Statement of financial position as at that date?