Case 4-1 Jaguar Land Rover PLC Jaguar Land Rover Automotive PLC (JLR) is a maker of luxury autos based in Coventry, United Kingdom. JLR uses IFRS and has a fiscal year-end of March 31. You have been asked to use your knowledge of IFRS to convert key metrics for the com- pany to a U.S. GAAP basis. For simplicity, you may assume that the only material differences between JLR's as-reported num- bers and those it would report under U.S. GAAP are traceable to its policy of capitalizing development costs. Internally Generated Intangible Assets (from Footnote 2, Accounting Policies) Research costs are charged to the consolidated income statement in the year in which they are incurred. Product development costs incurred on new vehicle platforms, engines, transmission and new products are recognised as intan- gible assetswhen feasibility has been established, the Group has committed technical, financial and other resources to complete the development and it is probable that the asset will generate fu- ture economic benefits. The costs capitalised include the cost of materials, direct la- bour and directly attributable overhead expenditure incurred up to the date the asset is available for use. Interest cost incurred is capitalised up to the date the asset is ready for its intended use, based on borrowings incurred specific- ally for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset. Product development cost is amortised over a period of between two and ten years. Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment loss, if any. Amortisation is not recorded on product development in pro- gress until development is complete. Research and Development (from Footnote 11) 2017 ( millions) Year ended 31 March Total research and development costs incurred 1,794 Research and development expensed (368) Development costs capitalized 1,426 --------------- Dordogmentos capitalized 1425 page 154 Intangible Assets (selections from Footnote 18) Traduct Development la Frans Capital Federt Duivela Mur 2016 435 Additionally developed 1. JEDI Dursul Land Maschi 2017 2,156 5.196 Asantius Batch 2016 LESS Aeon Southea Dils CLE March 2017 New Marron 23 Required: 1. What percentage of R&D expenditures was capitalized during the fiscal year ending March 31, 2017? How does this percent- age compare with the capitalization ratios of the German auto- makers profiled in Exhibit 4.4