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On 1 July 2019, Mr. Qarizh, Chief Operating Officer of Teguh Bhd and his assistants started a small research project, to come out with an integrated chemical control program that could improve the quality of the river. The research costs were RM40,000. Four months later, Mr Qarizh was able to develop a formula to produce a chemical and incurred a cost of RM200,000. Additional cost of RM20,000 were incurred to further enhance the features of product that have been developed. The project was named Neurolizer and it was launched for commercial production in June 2020 and is expected to be in the market for ten (10) years. The net recoverable amount of Neurolizer as at 30 June 2020 is RM180,00014.
Question 1: Explain the accounting treatment for the cost incurred during the research and development phase in accordance with MFRS138 Intangible Assets.
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