Question

Continuing from Question 2 Scenario C On March 1, 2019, Desert discovered that R&D costs of $150,000 for 2017 were capitalized as a part of the Historical Cost of the Patent, instead of being expensed. Income from Continuing Operations for 2019 includes the current year's R&D costs of $125,000 as an expense. 1. What type of scenario is addressed? (Select] 2. What adjustment (if any) is needed to Desert's ICO for 2019? Select] 3. Does Desert need to restate its 2017 financial statements? [ Select)

Answer 1

Cinswer Green that : On march 1, 2019 desert des covered that RED a Costs of = $150000 Encome from Continuing operations for 2019 includes the current year's R&D costs of $125000 as an Eztpense. 1. What type of scenario å addressed. The The ar answer is change in accounting policy 2. What adjustment Bo needed to devel's ico for 2019 . From the given information it is clear that the RED costs is abeads classified as an Expense. So, there is no adfcutment is needed to desert's ico for 2014. And there can be captalized when

the costs belongs to development phase. Does desezt need to restato its 2017 financial Statements . Here the desert needs to srestate its financial Statements of 2017. $150000 needs to be de bited ferom ncome staderent. So, Yes Desert needs to srestate its 2017 financial Statements.