Should be included as an asset in the balance sheet

Reference no: EM133359950

Question: The directors are confident that they have a new club design, the driver XCLBR, which will be a best seller. During the year ended 30 June 2023, we will have incurred $50,000 to source new materials for testing in order to manufacture this product. The prototype cost $55,000 to produce. Initial material identified has proven difficult to obtain. Our junior accountant insists that we should recognise these amounts as expenses, but the directors are adamant that the total $105,000 should be included as an asset in the balance sheet as it has the potential to produce economic benefits.

Reference no: EM133359950

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