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Mardaloop Inc. is developing a new process that it plans to sell. During 2019 and 2020,...

Mardaloop Inc. is developing a new process that it plans to sell. During 2019 and 2020, the company had capitalized $1.5 million and $0.3 million, respectively. An additional $0.4 million was spent in 2021. During 2021 it became apparent that, due to a lack of financial resources, the company would not be able to complete the project. The total amount of capitalized costs relating to this project at the end of 2021 is

a. nil. b. $2.2 million. c. $1.5 million. d. $1.8 million.

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Answer #1

Option A. NIL

As the company could not be to complete the project due to non-availability of financial resources.

Entire cost capitalised over the years has to be Expensed to P& L as there is a lack of financial viability in completing the project.

So, the balance in the capitalised costs will be nil at the end of the year 2021.

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