Khair Ltd carries out research and development on a continuous basis. The directors of the company are passionate about improving their medicinal drugs and finding new cures. In the current financial year, the company has been making significant findings regarding a vaccine for the coronavirus. To this effect, they have registered a patent for a new vaccine that will soon be available to customers. The following costs have been incurred in respect of the patent in the current financial year. Research salaries R250 000 Development salaries R450 000 Initial marketing costs R30 000 Fees to register patent R78 000 Materials used in development R12 000 The development was completed on 1 July 2020. Patents are amortised on a straight‐line basis at 20% per annum with no residual value. Prepare the journal entry to recognise the patent in the financial statements of Khair Ltd on 1 July 2020. Narrations are required
Khair Ltd carries out research and development on a continuous
basis. The directors of the company are passionate about
improving their medicinal drugs and finding new cures.
In the current financial year, the company has been making
significant findings regarding a vaccine for the coronavirus. To this
effect, they have registered a patent for a new vaccine that will
soon be available to customers. The following costs have been
incurred in respect of the patent in the current financial year.
Research salaries R250 000
Development salaries R450 000
Initial marketing costs R30 000
Fees to register patent R78 000
Materials used in development R12 000
The development was completed on 1 July 2020.
Patents are amortised on a straight‐line basis at 20% per annum
with no residual value.
Prepare the
statements of Khair Ltd on 1 July 2020.
Narrations are required
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