Question
Walking on Air Ltd is developing a new form of individual transport that will act like a personal hovercraft. Costs for the year ending 30
Walking on Air Ltd is developing a new form of individual transport that will act like a personal hovercraft. Costs for the year ending 30 June 2018 are as follows:
Research Expenditure $950 000
Development Costs $650 000
Due to the high individual cost of items, sales of this prototype model are anticipated to be small and generate $100 000 per year over the next four years. Following that time, a new and cheaper consumer model will be under production based on the research developed for the prototype. It will however, require additional development expenditure.
Required
How much of the research and development costs should be amortised in the year ending 30 June 2018 and what is the amount of amortisation for the year ending 30 June 2020 (rounded to the nearest dollar)?
Group of answer choices
Expensed in the year ending 30 June 2018: $1 200 000 and amortised in the year ending 30 June 2020: $100 000.
Expensed in the year ending 30 June 2018: $950 000 and amortised in the year ending 30 June 2020: $65 000.
Expensed in the year ending 30 June 2018: $950 000 and amortised in the year ending 30 June 2020: $216 667.
None of the given answers.
Expensed in the year ending 30 June 2018: $1 200 000 and amortised in the year ending 30 June 2020: $30 00.
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