3 Below, you are given some of the financial statement items of Bennett Ltd Income Statement (Em) 2017 2018 2019 2020 Revenues 16,500 15,000 15,500 16,250 Costs of Sales -11,550 -10,500 -10,850 -11,375 R&D expenditure (*) -2,200 -2,100 -2,250 -2,150 Selling, Gen. and Admin costs -1.650 -1.500 -1.550 -1.625 Earnings before tax 1,100 900 850 1,100 Taxation, 20% -220 -180 -170 -220 Profit for the year 880 720 680 880 (*) R&D expenditure in 2016 is 1,800 Statement of financial position (m) 2017 2018 2019 2020 Selected items Net Propety plant equipment (PPE) 9,500 9,800 10,100 10,400 Deferred tax liability 1,045 1,078 1,111 1,144 Net Assets (or Equity) 8,550 8,820 9,090 9,360 R&D expenditures are evenly distributed throughout the year. Required: Reverse back the R&D expenditures from the income statement and capitalise them in statement of financial position as noncurrent assets assuming 4 year economic life with zero residual value, and a) Calculate cumulative R&D asset for 2019 and 2020, and amortisation expense for 2020 (16 Marks) b) How would the 2020 income statement, and both 2019 and 2020 statement of financial position be affected? (The corporate income tax rate is 20%) (9 Marks) c) How would the 2020 Return on Equity (ROE) [Profit for the Year / Average Equity] be affected? Briefly comment on your finding. (word count limit on your comment is 100 words). (5 Marks) (Total: 30 Marks)