Wyse Associates Limited has recently embarked on several projects designed to expand its business in the future. During the year to 30 June 2013, the following information is available regarding two of the projects.

Project A Cost of £80,000 was incurred in substantially improving an existing product with a view to making it safer and with fewer side effects. Tests were still ongoing at 30 June, but it was hoped to market the product in time for Christmas 2013. In addition to the above £80,000, a special analysis machine has been purchased costing £50,000, which has a useful life of four years with a residual value of £10,000. This will be used to carry out a range of research activities over its useful life.

Project B The company has spent £60,000 investigating possible alternative raw materials with similar properties that it could use instead of asbestos. It also purchased a machine to assist in analysing the properties of various alternative materials, for £30,000. It is the company’s intention to spend another two years researching into this field. At the end of this time, if the search for an alternative to asbestos has not proved fruitful, it will research into making asbestos safer to use.

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Discuss how the expenditure on Projects A and B would be dealt with in the company’s accounts for the year to 30 June 2013, and justify your decisions.