NXS Semiconductor prepares its financial statements according to International Financial Reporting Standards.The company incurred the following expenditures during 2018 related to the development of a chip to be used inmobile devices:Salaries and wages for basic research $3,450,000Materials used in basic research 330,000Other costs incurred for basic research 1,220,000Development costs 1,800,000Legal and filing fees for a patent for the new technology 50,000The development costs were incurred after NXS established technological and commercial feasibility and afterNXS deemed the future economic benefits to be probable. The project was successfully completed, and the newchip was patented near the end of the 2018 fiscal year.Required:1. Which of the expenditures should NXS expense in its 2018 income statement?2. Explain the accounting treatment of the remaining expenditures.
NXS Semiconductor prepares its financial statements according to International Financial Reporting Standards.
The company incurred the following expenditures during 2018 related to the development of a chip to be used in
mobile devices:
Salaries and wages for basic research $3,450,000
Materials used in basic research 330,000
Other costs incurred for basic research 1,220,000
Development costs 1,800,000
Legal and filing fees for a patent for the new technology 50,000
The development costs were incurred after NXS established technological and commercial feasibility and after
NXS deemed the future economic benefits to be probable. The project was successfully completed, and the new
chip was patented near the end of the 2018 fiscal year.
Required:
1. Which of the expenditures should NXS expense in its 2018 income statement?
2. Explain the accounting treatment of the remaining expenditures.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
