Question
One of the farms owned by SDPSB located in Kuala Pilah, Negeri Sembilan has been gazetted to conduct research and development (R&D) activities for the
One of the farms owned by SDPSB located in Kuala Pilah, Negeri Sembilan has been gazetted to conduct research and development (R&D) activities for the biodiesel industry. To that end, a research facility has been built and operated using agricultural products from the farm. The rest of the agricultural products from the farm (which are not used for research purposes) are sold to a nearby factory, which in return agrees to give a discount on the price of fertilizer which is a by-product of the factory to the SDPSB farm.
Apart from research and development on the biodiesel industry, the facility at the Kuala Pilah plantation is able to carry out various research for the downstream palm oil products industry such as health products and the construction industry. Sometimes SDPSB leases the facility to other companies who are interested in conducting such research. The government through certain agencies also provides various grants for research purposes. SDPSB through the plantation also collaborated with the Malaysian Palm Oil Board (MPOB) to conduct further research for the purpose of marketing the research findings in the form of biodiesel products and similar technologies.
Question:
How the results are obtained from the research facility owned by Sime Darby Plantation Sdn Bhd located in Kuala Pilah should be accounted for based on MFRS 15 Revenue Recognition.
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