Real Retailers Limited is a company that operates in the clothing retail industry. Real Retailers Limited buys and sells various clothing items and up until now has only been selling their dothing in physical stores. The company has a 31 December year-end. At a recent board meeting, the directors resolved to start trading online as well and in order to do this, they need to develop a website that can be used by their customers for online shopping. During March and April 2022, the management of Real Retailers Limited investigated and planned the development of the website and the costs incurred during this period were as follows: Travelling expense Consultation fees The viability studies that management requested indicated that the website would lead to a substantial increase in the company's profitability. 7 R9 500 R29 800 Real Retailers Limited employed a firm of web consultants, who during the period June to November 2022 worked on developing the website and the following costs were incurred during this period: Content development costs and programming Graphic design costs incurred for the website to operate as intended by management REQUIRED: R210 000 The website was successfully completed and implemented on 1 December 2022, just in time for the holiday season. You can assume that all the requirements of IAS 38.57 have been met for the capitalisation of the website costs. The future economic benefits of the website could not be measured accurately. Real Retailers Limited was able to estimate that the benefits of the website would only flow to the entity for a period of three years due to fast-changing technology. R44 500 HFAC332-1-Jan-Jun2023-SA1-CP-V3-12102022 Advise the management of Real Retailers Limited on ether the costs incurred in connection with the website could be capitalised or whether it should be expensed, with reference to the requirements of IAS 38 and SIC 32. (10 marks)

Retalers Limited buys and sells various cloting Rems and up unti now has only been selling their dething in physical stores. The company has a 31 December yearend. Al a recent board meeting. the directors resolved to start trading online as well and in order to do thes, they need to develop a webelte that can be used by their customers for online shopping During March and Apri 2022, the management of Real Retalers Limited investigated and planned the development of he webste and the costs incurred dunng this period were as follow - Traveling expense - Consultation fees PaO 800 The viabliy studes that management requested indicaled that the weos be wouldiead to a substarial increase in the company's proftably. Real Reiles timited employed a firn of web contultants, who during the penod tune to November 2022 worked on devesoping the webate and the following costs were incured daring this pericd - Cortent development cots and programming R210 000 - Graphic dasign costs incurred for the webeite to operate as interded by management R44 500 The wobsile was suocesthily compleled and implemerted on 1 Decembet 2022. Not in time for the holday season. You can ascume that an the requienents of iAS 36.67 have been met for the captat sation of he weble couts The fulure ecenomic berefts of the webine could not be messured accurately. Real Retalers Limiled was able to estimate that be berefis of the website would orfy fow to the ently for a period of twee years due is tast-changire lechnology. 7 AEQUIRED: Advise the managemert of Raal Retasen Limited on whether the coats hcirred in connection with the webste could be capialsed or whether t should be expersed wer reference to the requirements of LAS 38 and sic 32