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A company has been developing a process to be used on construction sites. Once fully developed, this process could cause future project operating costs to
A company has been developing a process to be used on construction sites. Once fully developed, this process could cause future project operating costs to decrease by as much as 10%. At that time, the company plans to apply for a patent to protect the process. Total costs incurred on the development project to December 31, 20x5 are $250,000 and are included in Administrative expenses. It is hoped that the development project will be completed by December 31, 20x6 and, if successful, will have a useful life of 20 years. The company is committed to the development of this project. The company CEO believes that the costs incurred to date can be capitalized as intangible assets. The CFO is asking for your opinion on this matter. The CFO believes that there is a 50% chance that the project will be successful and provide the desired results. Required Provide the CFO with your opinion as to whether this development project qualifies for capitalization. Make sure to provide reasoning to support your opinion
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