In 2020, Lalli Corporation incurred R&D costs as follows: Materials and equipment P100,000 Personnel 100,000 Indirect costs 50,000 P250,000 These cost relate to a product that will be marketed in 2021. The Company estimates that these costs will be recouped by December 31, 2024. Required What is the amount of R&D costs expense in 2020? Show the solution step by step

In 2020, Lalli Corporation incurred R&D costs as follows: Materials and equipment P100,000 Personnel 100,000 Indirect costs 50,000 P250,000 These cost relate to a product that will be marketed in 2021. The Company estimates that these costs will be recouped by December 31, 2024. Required What is the amount of R&D costs expense in 2020? Show the solution step by step

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter7: Deductions And Losses: Certain Business Expenses And Losses

Section: Chapter Questions

Problem 28CE

See similar textbooks

Similar questions

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?
In 2020, Lalli Corporation incurred R&D costs as follows: Materials and equipment 100,000Personnel 100,000Indirect costs 50,000 P250,000 These cost relate to a product that will be marketed in 2021. The Company estimates that these costs will be recouped by December 31, 2024. RequiredWhat is the amount of R&D costs expense in 2020?
In 2019, Austin Powers Corporation developed a new product that will be marketed in 2020. In connection with the development of this product, the following costs were incurred in 2019: research and development costs $400,000, materials and supplies consumed $60,000, and compensation paid to research consultants $125,000. It is anticipated that these costs will be recovered in 2022. What is the amount of research and development costs that Austin Powers should record in 2019 as a charge to expense?
During 2019, Latte Inc., spent P5,000,000 developing its new "Hyperion" software package. Of this amount, P2,200,000 was spent before technological feasibility was established for the product, which is to be marketed to third parties. The package was completed at December 31, 2019. Latte expects a useful life of 8 years for this product with total revenues of P16,000,000. During the first year (2020), Latte realizes revenues of P3,200,000 a. What journal entries should have been prepared by the accountant in 2019 for the foregoing facts? b. Prepare the entry to record amortization at December 31, 2020
Micropolis Technology began a new development project in 2020. The project reached technological feasibility on September 1, 2021, and was available for release to customers at the beginning of 2022. Development costs incurred prior to September 1, 2021, were $4,560,000, and costs incurred from June 30 to the product release date were $1,920,000. The 2022 revenues from the sale of the new software were $3,950,000, and the company anticipates additional revenues of $11,850,000. The economic life of the software is estimated at three years. Amortization of the software development costs for the year 2022 would be:
Bartov Corporation agreed to build a warehouse for $2,500,000. Expected (and actual) costs for the warehouse follow: 2019, $400,000; 2020, $1,000,000; and 2021, $500,000. The company completed the warehouse in 2021. Compute revenues, expenses, and income for each year 2019 through 2021 assuming that Bartov’s performance obligation for the warehouse is fulfilled over time and that the costs incurred provide a close approximation of the value conveyed to the customer. Round percentages to the nearest whole percent. Use rounded percentages to calculate subsequent answers.
Bartov Corporation agreed to build a warehouse for $2,500,000. Expected (and actual) costs for the warehouse follow : 2019, $400,000; 2020, $1,000,000; and 2021, $500,000. The company completed the warehouse in 2021. Compare revenues, expenses, and income for each year 2019 through 2021 assuming that Bartov’s performance obligation for the warehouse is fulfilled over time and that the costs incurred provide a close approximation of the value conveyed to the customer.
In 2019, eGames spent $8,000,000 developing new software. Of this amount,$5,300,000 was spent before July 2019—when technological feasibility was established. The product was marketedto consumers beginning in September 2019. eGames estimates total revenue of $20,000,000 to be earnedduring the software’s three-year life (calculated from the September 1 product release date). During 2019, revenueof $10,000,000 was recognized.Required:1. Prepare the 2019 journal entries to record the development costs.2. Compute the amount of amortization to be recognized in 2019 and prepare the appropriate journal entry, ifany.3. Next Level What is the justification for treating software development costs differently from R&D costs?
In 2020, Zeta Construction Corp. began work on a contract for $3,700,000. Other details follow: 2020 Costs incurred during the year $1,800,000 Estimated costs to complete as of December 31 1,200,000 Billings during the year1,650,000 Collections during the year 975,000 Zeta uses the percentage-of-completion method. For calendar 2020, Zeta should report gross profit of?
Moonlight Construction Company had a contract starting April 2020, to construct a P9,000,000 building that is expected to be completed in September 2022, at an estimated cost of P8,250,000. At the end of 2020, the costs to date were P3,795,000 and the estimated total costs to complete had not changed. The progress billings during 2020 were P1,800,000 and the cash collected during 2020 was 1,200,000. At December 31, 2020 Moonlight would report Construction in Process in the amount of:
Power Company incurred P3,000,000 (P800,00 in 2019 and P2,200,000 in 2020) to develop a computer software product. P1,000,000 of this amount was expended before technological feasibility was established in early 2020. The product will earn future revenues of P8,000,000 over its 5-year life, as follows: 2020-P2,000,000; 2021-P2,000,000; 2022-P1,600,00; 2023-P1,600,000; and 2024-P800,000.Required:1. What is the amount of development cost that will be capitalized?2. What is the amortization expense based on the expected revenue ratio?
Romo Company spent $190,000 developing a new process, $45,000 in legal fees to obtain a patent, and $91,000 to market the process that was patented, all in the year 2020. How should these costs be accounted for in 2020?