In preparing the company's statement of comprehensive income and statement of financial position at 31 December X7 the following further information is relevant.
a.The total for development costs as at 1 January X7 relates to two projects:
| Project 836 : completed project | 3,500,000 |
| Amount to be amortised in X7 | 140,000 |
| Project 911 in progress | 4,500,000 |
| 8,000,000 |
b. The research and development expenditure for the year is made up of:
| Research expenditure | 3,500,000 |
| Development costs on project 911 which continues to satisfy the requirements of IAS 38 | 4,000,000 |
| 7,500,000 |
According to IAS 38 intangible assets,
1. what amount should be charged in the statement of comprehensive income for research and development costs for the year ended 31 December X7?
2. What amount should be disclosed as an intangible asset in the statement of financial position for the year ended 31 December X7?
SUGGESTED SOLUTIONS:
| Research expenditure | 3,500,000 |
| Amortisation in X7 | 140,000 |
| Comprehensive income statement to be charged | 3,640,000 |
| Project 836 | 3,500,000 |
| Project 911 | 4,500,000 |
| Project 911 X7 | 4,000,000 |
| Amortisation in X7 | (140,000) |
| Statement of financial position | 11,860,000 |
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