Solution-Discuss the accounting treatment of the

Discuss the accounting treatment of the expenditures

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Reference no: EM133059489

Question - A. Autumn Bhd started developing its own line of children's apparel called "Spring". The expenditure incurred for the year ended 31 December 2018 was as follows:

1 January to 31 December 2018	RM
Market research	2,000,000
Testing materials suitable for products	3,000,000
Prototype apparel	6,000,000
Refinement of apparel	2,000,000
Development work to finalize design	7,000,000
Production and launch of products	10,000,000
	30,000,000

Included in the production and launching of products are expenditure incurred in upgrading machinery used in developing the product of RM3,000,000 and training of staff for RM1,500,000.

Required - Discuss the accounting treatment of the above expenditures for the year ended 31 December 2018. Prepare the journal entries to support your answer.

B. Haroo Bhd acquired a patent at a cost of RM1,000,000 on 1 July 2016 for its "Extraordinary You" beauty product. The patent has an economic life of 5 years. However, on 30 June 2018, similar product by a rival company led to a significant decline in cash flows. A review has determined that the present value of future cash inflows was estimated at 55% of the initial cost and the fair value less cost to sell was RM530,000.

Required - Discuss the accounting treatment of the patent for the year ended 30 June 2018.

Reference no: EM133059489

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Discuss the accounting treatment of the expenditures

Reference no: EM133059489

Reference no: EM133059489

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