Thirsty plc makes a revolutionary type of can called Soak. The can has aresealable top which allows the can to be sealed after opening to prevent gasescaping. In January 2019 the idea for this new product was launched, and aloan of £5 million was obtained from Sunshine Bank in order to finance thisproject.The associated costs and activities for the year ended 31 May 2020 are asshown below:01 June 2019 - 31 July 2019: £30,000 per month on market surveys toestablish whether or not consumers would want such can. The marketsurveys suggest that there is a market for the can amongst environmentallyaware consumers.• 01 August 2019 – 30 September 2019: £100,000 for evaluation of a numberof alternative prototypes and designs.• End of September 2019: a design is chosen and engineers produce a planwhich indicates that is technically possible to produce the Soak can.• 01 October 2019 -31 January 2020: £1,300,000 was spent for the designand construction of a pilot manufacturing plant. This plant is not capable ofoperating on a scale economically feasible for commercial production.• 01 February 2020 - 31 May 2020: £500,000 for testing of a pilotmanufacturing plant.All expenditure incurred has been confirmed by the accounting department.Thirsty limited has applied to register the Soak can as a patent.Question:Discuss, with the reference to IAS 38: Intangible Assets, the correct accountingtreatment for all the costs incurred in relation to the Soak can for the year ended31 May 2020. (Hint use the definitions of "research" and "development").

The demonstration for an intangible asset that arose due to development are: 1. The intangible…

Thirsty plc makes a revolutionary type of can called Soak. The can has a resealable top which allows the can to be sealed after opening to prevent gas escaping. In January 2019 the idea for this new product was launched, and a loan of £5 million was obtained from Sunshine Bank in order to finance this project.

Thirsty plc makes a revolutionary type of can called Soak. The can has a resealable top which allows the can to be sealed after opening to prevent gas escaping. In January 2019 the idea for this new product was launched, and a loan of £5 million was obtained from Sunshine Bank in order to finance this project.

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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