CASE STUDY Lie Dharma Inc. is a newly established enterprise. It was set up by an entrepreneur who is generally interested in the business of providing engineering and operational support services to aircraft manufacturers. Lie Dharma Inc., through the contacts of its owner, received a confirmed order from a well known aircraft manufacturer to develop new designs for ducting the conditioning of their aircraft. air CASE STUDY The expenditures Lie Dharma Inc. incurred in pursuance of its research and development project follow, in chronological order: January 15, 20x8: Paid $175,000 toward salaries of the technicians (engineers and consultants) March 31, 20X8: Incurred $250,000 toward cost of developing the duct and producing the test model June 15, 20X8: Paid an additional $300,000 for revising the ducting process to ensure that product could be introduced in the market 28 CASE STUDY August 15, 20X8. Developed, at a cost of $80,000, the first model (prototype) and tested it with the air conditioners to ensure its compatibility October 30, 20X8. A focus group of other engineering providers was invited to a conference for the introduction of this new product. Cost of the conference aggregated to $50,000. December 15, 20X8. labor, material, and overhead costs for designing product is $200,000. Quality assurance testing cost is $20,000. CASE STUDY The development phase was completed and a cash flow budget was prepared. Net profit for the year 20X8 was estimated to equal $900,000. The question is: What is the proper accounting treatment for the various costs incurred during 20X8? 20