Energy Ltd is involved in the research and development of a new type of three-finned surfboard. For this R & D it has incurred the following expenditure:

• $50 000 obtaining a general understanding of water-flow dynamics
• $30 000 on understanding what local surfers expect from a surfboard
• $90 000 on testing and refining a certain type of fin
• $190 000 on developing and testing a full prototype of the three-finned board, to be called the ‘thruster’.

There is expected to be a very large market for the product, which will generate many millions of dollars in revenue.

REQUIRED
Determine how the above expenditure would be treated for accounting purposes.