Reference no: EM132854995
Question - A pharmaceutical company developed over the years a new drug against high blood pressure. Recently, they received approval to commercialise the drug from the regulatory authorities. They also obtained patent protection and now have a patent for this new drug for the next 10 years. The pharmaceutical company incurred the following costs during the R & D process which led to the marketable drug:
Labour costs in the research process for molecules $60,000
Materials and labour used in the research on possible molecules that could be further developed into drugs $130,000
Materials and labour costs in the development of one molecule into a promising drug for blood pressure control $200,000
Costs incurred during the testing process on humans $80,000
Costs made in the process of the demand for recognition with the regulatory authorities $20,000
Required - How will this drug and the related costs be accounted for at the initial recognition of the intangible asset?
If the pharmaceutical company uses the cost model subsequently to initial valuation, what will be recorded after the initial recognition in the books of the pharmaceutical company?
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