Q1 This question comprises three independent parts.Q.2 Briefly discuss why research expenditure is expensed in profit orloss rather than capitalised as an intangible asset.Q3 Khair Ltd carries out research and development on a continuousbasis. The directors of the company are passionate aboutimproving their medicinal drugs and finding new cures.In the current financial year, the company has been makingsignificant findings regarding a vaccine for the coronavirus. To thiseffect, they have registered a patent for a new vaccine that willsoon be available to customers. The following costs have beenincurred in respect of the patent in the current financial year.Research salaries R250 000Development salaries R450 000Initial marketing costs R30 000Fees to register patent R78 000Materials used in development R12 000The development was completed on 1 July 2020.
Q1 This question comprises three independent parts.
Q.2 Briefly discuss why research expenditure is expensed in profit or
loss rather than capitalised as an intangible asset.
Q3 Khair Ltd carries out research and development on a continuous
basis. The directors of the company are passionate about
improving their medicinal drugs and finding new cures.
In the current financial year, the company has been making
significant findings regarding a vaccine for the coronavirus. To this
effect, they have registered a patent for a new vaccine that will
soon be available to customers. The following costs have been
incurred in respect of the patent in the current financial year.
Research salaries R250 000
Development salaries R450 000
Initial marketing costs R30 000
Fees to register patent R78 000
Materials used in development R12 000
The development was completed on 1 July 2020.
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