A company had $20 million of capitalised development expenditure at cost brought forward at 1 October 20X7 in respect of products currently in production and a new project began on the same date. The research stage of the new project lasted until 31 December 20X7 and incurred $1.4 million of costs. From that date the project incurred development costs of $800,000 per month. On 1 April 20X8 the directors became confident that the project would be successful and yield a profit well in excess of costs. The project was still in development at 30 September 20X8. Capitalised development expenditure is amortised at 20% per annum using the straight line method. What amount will be charged to profit or loss for the year ended 30 September 20X8 in respect of research and development costs?
A company had $20 million of capitalised development expenditure at cost brought forward at 1 October
20X7 in respect of products currently in production and a new project began on the same date.
The research stage of the new project lasted until 31 December 20X7 and incurred $1.4 million of costs. From
that date the project incurred development costs of $800,000 per month. On 1 April 20X8 the directors
became confident that the project would be successful and yield a profit well in excess of costs. The project
was still in development at 30 September 20X8. Capitalised development expenditure is amortised at 20% per
annum using the
What amount will be charged to profit or loss for the year ended 30 September 20X8 in respect of research
and development costs?
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