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For each of the following issues determine whether the item should be Capitalised as an intangible Expensed to the Statement of Profit or Loss (Income Statement)   £200,000 spent on developing a new process that will not bring in new revenue, but will deliver cost savings £800,000 spent on developing a new product. A competitor has already brought a similar product to the market. The directors are uncertain if they will commit any further funds. £500,000 spent on marketing a new product. This has led to increased sales of £1 million £750,000 has been spent on developing a new product. The future benefits have been estimated at £500,000

For each of the following issues determine whether the item should be Capitalised as an intangible Expensed to the Statement of Profit or Loss (Income Statement)   £200,000 spent on developing a new process that will not bring in new revenue, but will deliver cost savings £800,000 spent on developing a new product. A competitor has already brought a similar product to the market. The directors are uncertain if they will commit any further funds. £500,000 spent on marketing a new product. This has led to increased sales of £1 million £750,000 has been spent on developing a new product. The future benefits have been estimated at £500,000

FINANCIAL ACCOUNTING
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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For each of the following issues determine whether the item should be

  • Capitalised as an intangible
  • Expensed to the Statement of Profit or Loss (Income Statement)

 

  • £200,000 spent on developing a new process that will not bring in new revenue, but will deliver cost savings
  • £800,000 spent on developing a new product. A competitor has already brought a similar product to the market. The directors are uncertain if they will commit any further funds.
  • £500,000 spent on marketing a new product. This has led to increased sales of £1 million
  • £750,000 has been spent on developing a new product. The future benefits have been estimated at £500,000.
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