Question
CD is a manufacturing entity that runs a number of operations including a bottling plant that bottles carbonated soft drinks. CD has been developing a
CD is a manufacturing entity that runs a number of operations including a bottling plant that bottles carbonated soft drinks. CD has been developing a new bottling process that will allow the bottles to be filled and sealed more efficiently. The new process took a year to develop. At the start of development, CD estimated that the new process would increase output by 15% with no additional cost (other than the extra bottles and their contents). Development work commenced on 1 May 20X0 and was completed on 20 April 20X1. Testing at the end of the development confirmed CDs original estimates. CD incurred expenditure of $180,000 on the above development. CD plans to install the new process in its bottling plant and start operating the new process from 1 May 20X1. The end of CDs reporting period is 30 April. Required: Explain the requirements of IAS 38 Intangible Assets for the treatment of development costs
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