Cerise Ltd (Cerise) has a year end of 30 April 2021. The company began developing a project on 1 May 2020, incurring total development costs up to the year end of £270,000 which were incurred evenly throughout the year. Cerise also incurred a one-off training expense for its employees to learn how to use the new product, costing £12,000 on 13 March 2021. This was incurred in addition to the £270,000 development costs. The relevant criteria for capitalisation according to IAS 38 Intangible Assets have been met by project Magenta from 1 January 2021. How much would be eligible for capitalisation for this project for the year ended 30 April 2021? a) £270,000 b) £78,000 c) £90,000 d) £102,000 Which option is correct and why

Cerise Ltd (Cerise) has a year end of 30 April 2021. The company began developing a project on 1 May 2020, incurring total development costs up to the year end of £270,000 which were incurred evenly throughout the year. Cerise also incurred a one-off training expense for its employees to learn how to use the new product, costing £12,000 on 13 March 2021. This was incurred in addition to the £270,000 development costs. The relevant criteria for capitalisation according to IAS 38 Intangible Assets have been met by project Magenta from 1 January 2021. How much would be eligible for capitalisation for this project for the year ended 30 April 2021? a) £270,000 b) £78,000 c) £90,000 d) £102,000 Which option is correct and why

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
Stag, a public limited company, is preparing its financial statements for the year ending 31 December 2021. Stag plc started a project on 1 January 2021. The initial costs of setting up the project incurred before 2021 were £2 million. From 1 January 2021 to 31 March 2021 ongoing project costs were £15,000 per month. On 1 April 2021, the project was considered to be technically feasible and commercially viable and from this date, project costs increased to £65,000 per month. From 1 July 2021 to 30 August 2021, additional £1.5 million was spent for the design and construction of a pilot for the project. This pilot is not capable of operating on a scale economically feasible for commercial production. From 1 September 2021 to 31 December 2021, additional £350,000 were also spent for testing of the pilot. Between 1 April 2021 and 31 December 2021, Stag spent £140,000 on research staff, £50,000 on initial staff training, and 30,000 on initial marketing plan. The project was not completed…
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