Question
Question 2 An entity has incurred the following expenditure during the current year: (a) $100,000 spent on the initial design work of a new product
Question 2
An entity has incurred the following expenditure during the current year:
(a) $100,000 spent on the initial design work of a new product it is anticipated that this design will be taken forward over the next two-year period to be developed and tested with a view to production in three years' time.
(b) $500,000 was spent on the testing of a new production system that has been designed internally and will be in operation during the following accounting year. This new system should reduce the costs of production by 20%.
How should each of these costs be treated in the financial statements of the entity?
Question 2
An entity has incurred the following expenditure during the current year:
(a) $100,000 spent on the initial design work of a new product it is anticipated that this design will be taken forward over the next two-year period to be developed and tested with a view to production in three years' time.
(b) $500,000 was spent on the testing of a new production system that has been designed internally and will be in operation during the following accounting year. This new system should reduce the costs of production by 20%.
How should each of these costs be treated in the financial statements of the entity?
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Financial accounting
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom
9th edition
978-0132751216, 132751127, 132751216, 978-0132751124
