Entity A had $9,800,000 of capitalised development expenditure at cost brought forward on 1 October 2020 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 2020 and incurred $556,000 of costs. From that date, the project incurred development costs of $256,000 per month. On 1 April 2021, 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 on 30 September 2021. Capitalised development expenditure is amortised using the straight-line method.  The useful life is estimated at 25 years. REQUIRED: Measure the amount that will be charged to Statement of Profit or Loss for the year ended 30 September 2021 in respect of research and development costs.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Entity A had $9,800,000 of capitalised development expenditure at cost brought forward on 1 October 2020 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 2020 and incurred $556,000 of costs.

From that date, the project incurred development costs of $256,000 per month.

On 1 April 2021, 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 on 30 September 2021.

Capitalised development expenditure is amortised using the straight-line method.  The useful life is estimated at 25 years.

REQUIRED:

Measure the amount that will be charged to Statement of Profit or Loss for the year ended 30 September 2021 in respect of research and development costs.

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