Marisa Ltd is involved in a research and development project to creat new diet pill. For the current year ended 30 June 2019 expenditure on the project is as follows:

Research

$352,500

Development

$750,000

The pill is expected to return profits of $105,000 per year for the 10 years commencing 1 July 2019. Assuming the company uses a straight-line method amortization. This company uses a discount rate of 8 per cent.

Required:

a) How much research and development cost should be expensed in the year to 30 June 2019?

b) How much development expenditure should be amortised in the year to 30 June2020?