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Exhibit 2 - Research & Development On 1 March 2020, Worldwide Fuels began a research project. The aim of the project was to investigate ways
Exhibit 2 - Research & Development On 1 March 2020, Worldwide Fuels began a research project. The aim of the project was to investigate ways of streamlining its production process. The initial costs of setting up the project were 7 million. From 1 March 2020 to 31 May 2020 ongoing project costs were 300,000 per month. On 1 June 2020, the project was considered. to be technically feasible and commercially viable and from this date project costs increased to 750,000 per month. From 1 July 2020 to 31 August 2020, additional 1,750,000 was spent for the design and construction of a pilot for the project . This pilot is not capable of operating on a scale economically feasible for commercial production. From 1 September 2020 to 1 December 2020, additional 430,000 were also spent for testing of the pilot. The project was not completed till 31 December 2020. Worldwide Fuels charged all the costs to complete the project to administrative expenses. Using Exhibit 2, discuss, with the reference to IAS 38: Intangible Assets, the correct accounting treatment for all the costs incurred in relation to the research project for the year ended 31 December 2020. (Hint: use the definitions of "research and development"). (350 words)
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