04 develop an engine that runs on fuel extracted from sugar 6.15 Research and development outlays Future Ltd has been involved in a project to cane. It started the project in February 2020. Between then and 30 June 2020, the end of the company's reporting period, Future Ltd spent $254 000 on the project. At 30 June 2020, there was no indication that the project would be commercially feasible, although the company had made significant progress and was sufficiently confident of future success that it was prepared to outlay more funds on the project. After spending a further $120 000 during July and August, the company had built a prototype that appeared to be successful. The prototype was demonstrated to a number of engineering com panies during September, and several of these companies expressed interest in the further devel- opment of the engine. Convinced that it now had a product that it would be able to sell, Future Ltd spent a further $65 000 during October adjusting for the problems that the engineering firms had pointed out. On1 November, Future Ltd applied for a patent on the engine, incurring legal and administrative costs of $35 000. The patent had an expected useful life of 5 years, but was renew- able for a further 5 years upon application Between November and December 2020, Future Ltd spent an additional amount of $82000 on engineering and consulting costs to develop the project such that the engine was at manufac- turing stage. This resulted in changes in the overall design of the engine, and costs of $5000 were incurred to add minor changes to the patent authority On 1 January 2021, Future Ltd invited tenders for the manufacture of the engine for commercial sale. Required Discuss how Future Ltd should account for these costs. Provide journal entries with an explanation of why these are the appropriate entries 04 develop an engine that runs on fuel extracted from sugar 6.15 Research and development outlays Future Ltd has been involved in a project to cane. It started the project in February 2020. Between then and 30 June 2020, the end of the company's reporting period, Future Ltd spent $254 000 on the project. At 30 June 2020, there was no indication that the project would be commercially feasible, although the company had made significant progress and was sufficiently confident of future success that it was prepared to outlay more funds on the project. After spending a further $120 000 during July and August, the company had built a prototype that appeared to be successful. The prototype was demonstrated to a number of engineering com panies during September, and several of these companies expressed interest in the further devel- opment of the engine. Convinced that it now had a product that it would be able to sell, Future Ltd spent a further $65 000 during October adjusting for the problems that the engineering firms had pointed out. On1 November, Future Ltd applied for a patent on the engine, incurring legal and administrative costs of $35 000. The patent had an expected useful life of 5 years, but was renew- able for a further 5 years upon application Between November and December 2020, Future Ltd spent an additional amount of $82000 on engineering and consulting costs to develop the project such that the engine was at manufac- turing stage. This resulted in changes in the overall design of the engine, and costs of $5000 were incurred to add minor changes to the patent authority On 1 January 2021, Future Ltd invited tenders for the manufacture of the engine for commercial sale. Required Discuss how Future Ltd should account for these costs. Provide journal entries with an explanation of why these are the appropriate entries