In 2016, Austin Powers Corporation developed a newproduct that will be marketed in 2017. In connection withthe development of this product, the following costswere incurred in 2016: research and development costs$400,000, materials and supplies consumed $60,000, andcompensation paid to research consultants $125,000. It isanticipated that these costs will be recovered in 2019.What is the amount of research and development coststhat Austin Powers should record in 2016 as a charge toexpense?

In 2016, Austin Powers Corporation developed a newproduct that will be marketed in 2017. In connection withthe development of this product, the following costswere incurred in 2016: research and development costs$400,000, materials and supplies consumed $60,000, andcompensation paid to research consultants $125,000. It isanticipated that these costs will be recovered in 2019.What is the amount of research and development coststhat Austin Powers should record in 2016 as a charge toexpense?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 18P

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Question

In 2016, Austin Powers Corporation developed a new
product that will be marketed in 2017. In connection with
the development of this product, the following costs
were incurred in 2016: research and development costs
$400,000, materials and supplies consumed $60,000, and
compensation paid to research consultants $125,000. It is
anticipated that these costs will be recovered in 2019.
What is the amount of research and development costs
that Austin Powers should record in 2016 as a charge to
expense?

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