Question
a) Techno Developments Ltd is developing a new green product to efficiently manage electricity usage. The company spent $400,000 researching demand for its product and
a) Techno Developments Ltd is developing a new green product to efficiently manage electricity usage. The company spent $400,000 researching demand for its product and a further $200,000 researching potential recycling processes.
The research was so favourable that the company proceeded to design machinery to manufacture the product. The design phase cost $800,000. It is expected that millions of units of the product will be manufactured for worldwide sale at a price of $20 each.
Task:
With specific reference to the appropriate accounting standard paragraph, advise what amount of this expenditure should be recognised (recorded) as an intangible asset, and what amount as an expense.
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