Intangible NCA Flashcards
Assoria Co had $20m of capitalised development expenditure at cost b/f at 01/10/X7 in respect of products currently in production and a new project began on the same date.
The research stage of the new project lasted until 31/12/X7 and incurred $1.4m costs. From that date, project incurred development costs of $800,000 per month. On 1/4/18 the directors of Assoria Co became confident that the project would be successful and yield a profit well in excess of costs. The project was still in development at 30/9/18. Capitalised expenditure is amortised at 20% per annum using SLM.
What amount will be charged to P/L for year ended 30/9/18 in respect of R&D costs?
Research costs - $1.4m
Expensed development - 800 x 3m = $2.4m
(from 1/1 to 31/3)
Depreciation on capitalised amount b/f - 20m x 20% = $4.0m
= $7.8m
