12. During the year 2017, LJH Bhd incurred and paid the following costs: RM Salaries and wages paid to the research team members Cost of materials used by research team members in search of the alternative manufacturing process of new products Market survey to test for any evaluation of new products Design, construction, and testing of pre production prototypes and models Design and construction of a new product Assessment of the commercial viability of the new product Quality control during commercial production, including routine testing of the product Trouble shooting in connection with breakdown during routine testing of the product 300,000 420,000 535,000 150,000 600,000 50,000 222,000 200,000

Question

LJH Bhd used the cost method to record its intangible assets and estimated the useful life of the development costs to be five years beginning year 2017. Due to the low demand in the market for the new products, LJH Bhd estimated that the recoverable amount for the development costs was only RM450,000 at the end of the year 2018.

Required:

a) Calculate the amount of development costs that can be capitalized as at 31 December 2017. 

B)Prepare the relevant journal entries in year 2017 and 2018.

c)Briefly explain the appropriate accounting treatment if there is no foreseeable limit to the period over which the development cost is expected to generate net cash flows for LJH Bhd according to MFRS138 Intangible Assets. 

12.
During the year 2017, LJH Bhd incurred and paid the following costs:
RM
Salaries and wages paid to the research team members
Cost of materials used by research team members in search of the alternative
manufacturing process of new products
Market survey to test for any evaluation of new products
Design, construction, and testing of pre production prototypes and models
Design and construction of a new product
Assessment of the commercial viability of the new product
Quality control during commercial production, including routine testing of the product
Trouble shooting in connection with breakdown during routine testing of the product
300,000
420,000
535,000
150,000
600,000
50,000
222,000
200,000
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Transcribed Image Text

12. During the year 2017, LJH Bhd incurred and paid the following costs: RM Salaries and wages paid to the research team members Cost of materials used by research team members in search of the alternative manufacturing process of new products Market survey to test for any evaluation of new products Design, construction, and testing of pre production prototypes and models Design and construction of a new product Assessment of the commercial viability of the new product Quality control during commercial production, including routine testing of the product Trouble shooting in connection with breakdown during routine testing of the product 300,000 420,000 535,000 150,000 600,000 50,000 222,000 200,000