Question
Castle began research and development for a tool in 2018. The development grew from different market surveys that were conducted at construction sites that showed
Castle began research and development for a tool in 2018. The development grew from different market surveys that were conducted at construction sites that showed that the workers were unhappy with the current tools. Costs incurred in 2021 were that cost of setting up a production lab for $60,000 and testing of the tool for $150,000. Castle intends on capitalizing all these costs in the December 31, 2021 years. No other costs are anticipated. Castle has the technical resources to complete the project and since testing to date has been successful, they intend to get the tool to market in 2023. Castle has been experiencing cash flow difficulties the past few months but hopes the sale of the company will be available to see this tool into production.
- Identify the accounting issues, analyze the issue using the IFRS standards and make a recommendation and discuss the impact.
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