Reference no: EM132812973

Research and Development cost for Headway Corporation for the year ended December 31, 2006:

Project A: Expected total revenues Php 7,000,000 starting in early 2008. Expected total costs will be Php 5,000,000. Costs incurred to date, all in 2006, are Php 2,200,000

Project B: Expected total revenues Php 6,000,000. Costs incurred to date are Php 3,500,000. Expected total costs are Php 4,500,000. The commencement of commercial sales is uncertain due to problems in raising funds to cover the final development costs.

Project C: Expected tota revenues, Php 3,500,000 with Php 1,000,000 of revenue already earned in 2006. Total development costs incurred, all in 2006, were Php 3,800,000

Research projects. Total costs spend in 2006 were Php 1,500,000

Problem 1: Of the total actual cost incurred in 2006, how much should be recognized outright as an expense?

Option 1: Php 3,500,000
Option 2: Php 2,200,000
Option 3: Php 5,000,000
Option 4: Php 1,500,000