Question
Chystar Limited had $20 million of capitalised development expenditure at cost brought forward at 1 October 2017 in respect of products currently in production and
Chystar Limited had $20 million of capitalised development expenditure at cost brought forward at 1 October 2017 in respect of products currently in production and a new project began on the same date. The research stage of the new project lasted until 31 December 2017 and incurred $1.4 million of costs.
From that date the project incurred development costs of $800,000 per month. On 1 April 2018 the directors became confident that the project would be successful and yield a profit well in excess of costs. The project was still in development at 30 September 2018. Capitalised development expenditure is amortised at 20% per annum using the straight line method.
What amount will be charged to the Statement of Comprehensive Income for the year ended 30 September 2018 in respect of research and development costs?
Select one:
A. $7,800,000
B. $6,880,000
C. $8,280,000
D. $3,800,000
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