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Sensational Lighting Ltd began developing automated landscape lighting software, which it expects to sell when completed. To date, the company has spent the following expenses developing the product:
1 March 2017: $50,000
31 August 2017: $70,000
1 December 2017: $25,000
By 1 June 2017, the company believed the project had completed the market analysis and technical analysis of the software requirements so that it was now technically feasible to produce prototypes. The company intends to commence the testing phase on 1 November 2017 and commence production by 31 January 2018.
Identify:
(a) Which paragraphs of AASB 138 can be applied here?
(b) Classify each cash expenditure as either research or development.
(c) Provide journal entries to record each individual cash expenditure.
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