Part I(9 marks)

Parker Ltd undertook the following transactions in the financial year ending 30 June 2021. All the expenditures have been paid in cash. Provide journal entries to account for Parker Ltd's transactions.

(a) Purchased Franchise from an external party and spent $30 000. At the end of the year, the market price is $35 000.

(b) Developed a new type of wheelchair to assist disabled people. Costs for the year ended 30 June 2021 are:

Research

$450 000

Development costs

$600 000

Due to the expected high demand from customers, sales of this 'prototype' model will be large; therefore managers think the recoverable amount of the development is greater than the carrying amount. How much of the research and development cost should be expensed in the period ended 30 June 2021, and what amount should be amortised in the year ended 30 June 2022, assuming the development last 5 years (rounded to the nearest dollar)?