A company has spent 100,000 on researching a new product in the year ending 31 Dec 20X7. They have also spent 350,000 on the development of another product which goes into commercial production in the next financial year ending 31 Dec 20X8. The development project meets the criteria set out in IAS 38 Intangible Assets.

How should these costs be treated in the financial statements for the year ending 31 Dec 20X7?

		350,000 should be capitalised as an intangible asset in the Statement of Financial Position. 100,000 should be expensed to the Statement of Profit or Loss
		450,000 should be expensed to the Statement of Profit or Loss.
		450,000 should be capitalised as an intangible asset in the Statement of Financial Position
		100,000 should be capitalised as an intangible asset in the Statement of Financial Position. 350,000 should be expensed to the Statement of Profit or Loss