Inspector Gadget Ltd has a policy of writing off development expenditure to the Income Statement as was incurred. In preparing its financial statements for the year 20X7 it became aware that under IFRS rules qualifying expenditure should be treated as an intangible asset. Below is the qualifying expenditure for the company: Year ended 30 Sep 20X4 Year ended 30 Sep 20X5 Year ended 30 Sep 20X6 Year ended 30 Sep 20X7 $'000 300 240 800 400 All capitalized expenditure is deemed to having a four year life. Assume that amortization starts at the beginning of the accounting period following capitalization. Inspector Gadget Ltd has no development expenditure before that for the year ended 30 September 20X4. Required: b. Treating the above as the correction of an error in applying an accounting policy, calculate the amounts that should appear in the income statement and statement of financial position (including comparative figures) and statement of changes in equity of the company inb respect of the development expenditure for the year ended 30 September 20X7.

Inspector Gadget Ltd has a policy of writing off development expenditure to the Income Statement as was incurred. In preparing its financial statements for the year 20X7 it became aware that under IFRS rules qualifying expenditure should be treated as an intangible asset. Below is the qualifying expenditure for the company: Year ended 30 Sep 20X4 Year ended 30 Sep 20X5 Year ended 30 Sep 20X6 Year ended 30 Sep 20X7 $'000 300 240 800 400 All capitalized expenditure is deemed to having a four year life. Assume that amortization starts at the beginning of the accounting period following capitalization. Inspector Gadget Ltd has no development expenditure before that for the year ended 30 September 20X4. Required: b. Treating the above as the correction of an error in applying an accounting policy, calculate the amounts that should appear in the income statement and statement of financial position (including comparative figures) and statement of changes in equity of the company inb respect of the development expenditure for the year ended 30 September 20X7.

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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Question

Inspector Gadget Ltd has a policy of writing off development expenditure to the Income
Statement as was incurred. In preparing its financial statements for the year 20X7 it became
aware that under IFRS rules qualifying expenditure should be treated as an intangible asset.
Below is the qualifying expenditure for the company:
Year ended 30 Sep 20X4
Year ended 30 Sep 20X5
Year ended 30 Sep 20X6
Year ended 30 Sep 20X7
$'000
300
240
800
400
All capitalized expenditure is deemed to having a four year life. Assume that amortization
starts at the beginning of the accounting period following capitalization. Inspector Gadget
Ltd has no development expenditure before that for the year ended 30 September 20X4.
Required:
b. Treating the above as the correction of an error in applying an accounting policy,
calculate the amounts that should appear in the income statement and statement of
financial position (including comparative figures) and statement of changes in equity
of the company inb respect of the development expenditure for the year ended 30
September 20X7.

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