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    Delaware Company Research and Development

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    S12-1 (LO 9)

    Delaware Company incurred the following costs that relate to research and development in 2009:

    Salaries and wages for lab research $ 400,000
    Materials used in R&D projects 200,000
    Construction of prototype used in R&D 900,000

    Research & Development assoc w /specific capitalized projects 500,000
    Purchase of equipment with alternative uses 200,000
    Marketing research to promote a new product 100,000

    Calculate the amount of research and development cost Delaware should report in the 2009 financial statement.

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    Solution Preview


    IAS 38 states that all research costs must be charged to expense while development costs can be capitalized only after technical and commercial feasibility of the assets for sale or use have been established.

    The following are examples of activities that typically would be included in research and development:
    ? Laboratory research aimed at discovery of ...

    Solution Summary

    Delaware Company research and development is examined.