A company completed development of a product on 31 December 20X0. The development cost was £100 million. Sales commenced on 1 January 20X1, and expected future profits at that date were £60 million (excluding development expenditure). You should assume the life of the product is 5 years with sales and profits spread equally over that period. What is the value of capitalised development
A company completed development of a product on 31 December 20X0. The development cost was £100 million. Sales commenced on 1 January 20X1, and expected future profits at that date were £60 million (excluding development expenditure). You should assume the life of the product is 5 years with sales and profits spread equally over that period. What is the value of capitalised development
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company completed development of a product on 31 December 20X0. The development cost was £100 million. Sales commenced on 1 January 20X1, and expected future profits at that date were £60 million (excluding development expenditure). You should assume the life of the product is 5 years with sales and profits spread equally over that period. What is the value of capitalised development expenditure (after amortisation) in the statement of financial position at 31 December 20X1?
A. 48 million
B. 60 million
C. 100 million
D. 80 million
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