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IAS 38 paragraph 57 (copied on page 413 of your text) identifies six criteria for the capitalization of some development costs. Use those criteria
IAS 38 paragraph 57 (copied on page 413 of your text) identifies six criteria for the capitalization of some development costs. Use those criteria in responding to the following independent cases. Case A: Assume a firm spends $20 million on a new machine that is subsequently used in production. Show how all six of the criteria in IAS 38 paragraph 57 would likely be met such that the machine would rightfully be treated as an asset with an assigned value of $20 million. Case B: During the year, a company paid staff $5,000,000 to investigate whether a drug combination was effective in reducing a specific type of cancer for terminally ill cancer patients. The trials were successful in a limited number of cases, but the results were mixed. Using the six criteria determine whether the costs should be capitalized or expensed? Case C: An automobile manufacturer spends $60 million on a project to improve the lithium-ion batteries used in its electric and hybrid vehicles. The project results in a 10% improvement in the capacity of each battery. Using the six criteria determine whether the costs should be capitalized or expensed? Required For each case, briefly respond to the bolded statement. Your responses can be in bullet point form.
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