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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 Summary

Delaware Company research and development is examined.

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ANSWERS

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 ...

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