Question

INSTRUCTION: Answer all questions in this section. Each question carries 1.5 marks Choose the letter a, b, c, ord that carries the best response. Use the multiple choice answer sheet located at the back of the answer booklet. 1. In 2016, Edwards Corporation incurred research and development costs as follows: Materials and equipment $105,000 Personnel 120,000 Indirect costs 150,000 $375.000 These costs relate to a product that will be marketed in 2017. It is estimated that these costs will be recouped by December 31, 2019, but its process has not achieved economic viability. The equipment has no alternative future use. What is the amount of research and development costs that should be expensed in 2016? a. $0. b. $225,000 c. $270,000. $375,000.

Answer 1

Option (d) is correct

All research and development costs should be expensed. If the equipment has alternative future use then it would have been excluded from research and development cost, but this is not the case here. So, entire cost of research & development of $375000 should be expensed in 2016 here.