en 7 out of On the expenditures to develop the new equipment with built-in video games, FIVEAM incurred $100,000 in costs to determine how a video game would work with exercise equipment; $700,000 in costs to design, test and construct prototype equipment; $80,000 was spent to determine the best production process for the new equipment Management believes the equipment will be a hit and spent only $47,000 to alert customers about the new product. Determine whether each expenditure incurred when developing a new exercise equipment is clearly a research cost or could potentially be a development cost. Discuss the impact on financial statement users' reporting needs. A. B ! x