b) Thirsty plc makes a revolutionary type of can called Soak. The can has aresealable top which allows the can to be sealed after opening to prevent gasescaping. In January 2019 the idea for this new product was launched, and a loanof £5 million was obtained from Sunshine Bank in order to finance this project.The associated costs and activities for the year ended 31 May 2020 are as shownbelow:01 June 2019 – 31 July 2019: £30,000 per month on market surveys toestablish whether or not consumers would want such can. The marketPage 3 of 5surveys suggest that there is a market for the can amongst environmentallyaware consumers.01 August 2019 – 30 September 2019: £100,000 for evaluation of a numberof alternative prototypes and designs.End of September 2019: a design is chosen and engineers produce a planwhich indicates that is technically possible to produce the Soak can.01 October 2019 -31 January 2020: £1,300,000 was spent for the design andconstruction of a pilot manufacturing plant. This plant is not capable ofoperating on a scale economically feasible for commercial production.01 February 2020manufacturing plant.All expenditure incurred has been confirmed by the accounting department.Thirsty limited has applied to register the Soak can as a patent.31 May 2020: £500,000 for testing of a pilotRequired:Discuss, with the reference to IAS 38: Intangible Assets, the correctaccounting treatment for all the costs incurred in relation to the Soak can forthe year ended 31 May 2020. (Hint use the definitions of “research" and"development")

The direct expenditures incurred by the business organization to enhance, design, and develop the…

Discuss, with the reference to IAS 38: Intangible Assets, the correct accounting treatment for all the costs incurred in relation to the Soak can for the year ended 31 May 2020. (Hint use the definitions of "research" and

Discuss, with the reference to IAS 38: Intangible Assets, the correct accounting treatment for all the costs incurred in relation to the Soak can for the year ended 31 May 2020. (Hint use the definitions of "research" and

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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