Oakville Corp. incurred the following costs during 2020 in connection with its research and development phase activities:Cost of equipment acquired for use in research and development projects over the next 5 years (straight-line depreciation used) $277,000Materials consumed in research projects 62,800Materials consumed in the development of a product committed for manufacturing in the first quarter 2021 31,300Consulting fees paid in the last quarter of 2020 to outsiders for research and development projects, including $5,000 for advice related to the $31,300 of materials used above 89,100Personnel costs of persons involved in research and development projects 111,500Indirect costs reasonably allocated to research and development projects 24,900General borrowing costs on the company’s line of credit 15,200Training costs for a new customer service software program 21,800 Calculate the amount to be reported as research and development expense by Oakville on its income statement for 2020. Assume the equipment is purchased at the beginning of the year. Assume the company follows IFRS for financial reporting purposes.

Research and Development Expenses: An R&D expenditure is incurred when a company's products or…

Answered: Oakville Corp. incurred the following…

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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Oakville Corp. incurred the following costs during 2020 in connection with its research and development phase activities:

Cost of equipment acquired for use in research and development projects over the next 5 years (straight-line depreciation used)		$277,000
Materials consumed in research projects		62,800
Materials consumed in the development of a product committed for manufacturing in the first quarter 2021		31,300
Consulting fees paid in the last quarter of 2020 to outsiders for research and development projects, including $5,000 for advice related to the $31,300 of materials used above		89,100
Personnel costs of persons involved in research and development projects		111,500
Indirect costs reasonably allocated to research and development projects		24,900
General borrowing costs on the company’s line of credit		15,200
Training costs for a new customer service software program		21,800

Calculate the amount to be reported as research and development expense by Oakville on its income statement for 2020. Assume the equipment is purchased at the beginning of the year. Assume the company follows IFRS for financial reporting purposes.

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