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How much of the research and development cost

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Question - Covid Ltd is involved in a research and development project to develop vaccine for Corona virus. For the current year ended 30 June 2020 expenditure on the project is as follows:

Research $470,000

Development costs $700,000

This project is expected to earn revenues of $100 000 per year for the 10 years commencing 1 July 2020. Assuming the company is using a straight-line method for amortization. The appropriate discount rate is 8 %.

Required -

a) How much of the research and development cost should be expensed in the year ended 30 June 2020?

b) How much development expenditure should be amortized in the year ended 30 June 2021?

Reference no: EM132943993

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