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(8) Serendipity Ltd is working on two independent research and development projects. Project A has recently been fruitful and the resulting product has been
(8) Serendipity Ltd is working on two independent research and development projects. Project A has recently been fruitful and the resulting product has been marketed, unfortunately with limited success. Development of the product is continuing in an effort to improve its marketability. Project B is due for product release in one year's time. The initial marketing surveys and forward contracts suggest that the outcome for this product is very favourable. The following information relates to the expenditures for the current period and budgeted figures for the next 3 years. All research costs in prior periods were expensed. The budgeted figures are considered accurate beyond a reasonable doubt. Project A B Research Development expenditure Expected revenue inflows Research Development expenditure Expected revenue inflows Actual 2013 12 50 5 41 90 0 Budget $000 2014 2015 2016 0 50 15 10 1018 0 0 OO 10 800 90 0 0 What is the research and development deferral for each project in 2013? A. Project A $5000; Project B $0 B. Project A $47 000; Project B $131 000 C. Project A $30 000; Project B $90 000 D. Project A $62 000; Project B $131 000 5 800 90
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