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Calculate the carrying value of development cost

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Reference no: EM132523416

Opal Limited (OL) commenced research work on a new product on 1 July 2017 and entered the development phase on 1 July 2018. In this respect, the following expenses were incurred and debited to capital work in progress.

For the year ended                                        30 Jun 2019                                                30 Jun 2018

Rs. in million

Research and development cost                     12.00                                                   8.00

Training of technical staff                               0.90                                                     -

Cost of laboratory equipment                                   -                                               4.00

Cost of trial run                                                0.65                                                   -

                                                                  13.50                                                12.00

  • Purchased on 1 January 2018, having estimated useful life of five years.
  • Criteria for recognition of the internally generated intangible asset have been met. The commercial production was started from 1 January 2019. It is estimated that the related product would have a shelf life of 10 years.

Required:

Question a) Identify the errors committed by the accountant in CWIP account as on 30 June 2019.

Question b) Calculate the correct cost of CWIP upon completion of the development of new product on 1 January 2019.

Question c) Calculate the carrying value of development cost on 30 June 2009.

Reference no: EM132523416

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