Heart Company incurred costs in 2022 as follows: Equipment acquired for use in various research and development projects - P900,000 Depreciation on the equipment above - 210,000 Materials used in R&D - 300,000 Compensation costs of personnel in R&D - 400,000 Outside consulting fees for R& D work - 200,000 Indirect costs appropriately allocated to R&D - 260,000 What is the total amount of research and development that should be reported in Heart Company's 2022 statement of comprehensive income?
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Heart Company incurred costs in 2022 as follows:
Equipment acquired for use in various research and development projects - P900,000
Materials used in R&D - 300,000
Compensation costs of personnel in R&D - 400,000
Outside consulting fees for R& D work - 200,000
Indirect costs appropriately allocated to R&D - 260,000
What is the total amount of research and development that should be reported in Heart Company's 2022 statement of comprehensive income?
The answer must be P1,390,000
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Solved in 3 steps
- During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years Low-cost repairs throughout the year totaled $79,000 Replaced a broken gear on a machine for $6,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?The following intangible assets were purchased by Hanna Unlimited: A. A patent with a remaining legal life of twelve years is bought, and Hanna expects to be able to use it for six years. It is purchased at a cost of $48,000. B. A copyright with a remaining life of thirty years is purchased, and Hanna expects to be able to use it for ten years. It is purchased for $70,000. Determine the annual amortization amount for each intangible asset.Comprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar Corporation purchased a machine for 50,000. Lapar paid shipping expenses of 500, as well as installation costs of 1,200. The company estimated that the machine would have a useful life of 10 years and a residual value of 3,000. On January 1, 2020, Lapar made additions costing 3,600 to the machine in order to comply with pollution-control ordinances. These additions neither prolonged the life of the machine nor increased the residual value. Required: 1. If Lapar records depreciation expense under the straight-line method, how much is the depreciation expense for 2020? 2. Assume Lapar determines the machine has three significant components as shown below. If Lapar uses IFRS, what is the amount of depreciation expense that would be recorded?
- Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.Hall Co. incurred research and development costs in 2021 as follows: Materials used in research and development projects $950,000 Equipment acquired that will have alternate future uses in future research and development projects 3,000,000 Depreciation for 2021 on above equipment 500,000 Personnel costs of persons involved in research and development projects 750,000 Consulting fees paid to outsiders for research and…Celina Company incurred the following research and developments costs in the current year: Materials used in research and development projects. 400,000Equipment acquired that will have alternate future use in future Research and Development projects 2,000,000 Depreciation on above equipment. 500,000Personnel costs of persons involved in research and development projects. 1,000,000Consulting fees paid to outsiders for research and development projects. 100,000 Indirect costs reasonably allocable to research and development projects. 200,000 What amount of research and development costs should be expensed in current year? A. 1,500,000 B. 1,700,000 C. 2,200,000 D. 3,500,000
- Virtual Co. incurred research and development costs in 2023 as follows: Materials used in research and development projects $ 450,000 Equipment acquired that will have alternate future uses in future research and development projects 3,000,000 Depreciation for 2023 on above equipment 300,000 Personnel costs of persons involved in research and development projects 750,000 Consulting fees paid to outsiders for research and development projects 300,000 Indirect costs reasonably allocable to research and development projects 225,000 Total $5,025,000 Assume economic viability has not been achieved. What amount of research and development costs should be charged to Virtual’s 2023 income statement?Bennet Co. incurred research and development costs in 2021 as follows: Materials used in research and development projects $ 450,000 Equipment acquired that will have alternate future uses in future research and development projects 3,000,000 Depreciation for 2021 on above equipment 300,000 Personnel costs of persons involved in research and development projects 750,000 Consulting fees paid to outsiders for research and development projects 300,000 Indirect costs reasonably allocable to research and development projects 225,000 Total $5,025,000 What amount of research and development costs should be charged to Bennet’s 2021 statement of profit or loss?Bennet Co. incurred research and development costs in 2021 as follows: Materials used in research and development projects $ 450,000 Equipment acquired that will have alternate future uses in future research and development projects 3,000,000 Depreciation for 2021 on above equipment 300,000 Personnel costs of persons involved in research and development projects 750,000 Consulting fees paid to outsiders for research and development projects 300,000 Indirect costs reasonably allocable to research and development projects 225,000 Total $5,025,000 Assume economic viability has not been achieved. What amount of research and development costs should be charged to Bennet’s 2021 statement of profit or loss? $Answer
- Tettleton Company incurred the following costs during the current year in con- nection with its research and development activities: Cost of equipment acquired that will have alternative uses in future research and development projects over the next 5 years (uses straight-line depreciation) : $300,000 Materials consumed in research and development projects $65,000 Consulting fees paid to outsiders for research and developement projects: $123,000 Personnel costs of persons involved in research and development projects: $315,000 Indirect costs reasonably allocable to research and development projects $44,000 Materials purchased for future research and development projects $72,000 Compute the amount to be reported as research and development expense by Tettleton on its income statement for the current year. Assume equipment is purchased at the beginning of the year.Oakville Corp. incurred the following costs during 2020 in connection with its research and development phase activities: Cost of equipment acquired for use in research and development projects over the next 5 years (straight-line depreciation used) $277,000 Materials consumed in research projects 62,800 Materials consumed in the development of a product committed for manufacturing in the first quarter 2021 31,300 Consulting fees paid in the last quarter of 2020 to outsiders for research and development projects, including $5,000 for advice related to the $31,300 of materials used above 89,100 Personnel costs of persons involved in research and development projects 111,500 Indirect costs reasonably allocated to research and development projects 24,900 General borrowing costs on the company’s line of credit 15,200 Training costs for a new customer service software program 21,800 Calculate the amount to be reported as research and development…Marlin Corporation incurred the following costs during the year ended December 31, 2024:Routine, on-going efforts to refine, enrich, & improve upon the qualities of an existing product 125,000Design, construction, and testing of pre-production prototypes and models 110,000 Quality control during commercial production including routine testing of products 150,000 Laboratory research aimed at discovery of new knowledge 180,000How much did Marlin Corporation incur in 2024 as research and development cost? a. 235,000 b. 275,000 c. 290,000 d. 330,000
