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During the course of a year Happy Ltd incurred expenditure on many research and development activities. Details of two of them are given below.
Project AX BX RM RM Staff salaries 15,000 10,000 Overhead (direct cost) 26,000 12,000 Plant on cost (life 10 years) 20,000 60,000
Required: In relation to MFRS138 Intangible Assets,
Question (a) Define (i) Research and (ii) Development
Question (b) Say under what circumstances it would be appropriate to defer development (capitalize) expenditure to future periods.
Question (c) Show how the expenditure on projects AX and BX would be dealt with in the statement of financial position and statement of comprehensive income in accordance with MFRS 138 Intangible Assets.
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