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How much research and development cost should be expensed

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Question - Marisa Ltd is involved in a research and development project to createa new diet pill. For the current year ended 30 June 2019 expenditure on the project is as follows:

Research $352,500

Development $750,000

The pill is expected to return profits of $105,000 per year for the 10 years commencing 1 July 2019. Assuming the company uses a straight-line method amortization. This company uses a discount rate of 8 per cent.

Required -

a) How much research and development cost should be expensed in the year to 30 June 2019?

b) How much development expenditure should be amortised in the year to 30 June 2020?

 

Reference no: EM132547606

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