Explain the required ifrs financial reporting treatment

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The draft financial statements of Tacos plc include research and development expenditure of $390,500 within intangible assets. The accountant's working papers show that this all related to the development of a new waterproof fabric, which was assessed as being commercially viable on 31 March 2019. The development of the fabric was completed on 31 August 2019, and the first fabric was delivered to customers on 1 September 2019.

The amount capitalised is made up as follows:

Research costs                                                                    100,000

Development costs incurred prior to 31 March 2015                    55,500

Development costs incurred from 1 April 2015 to 31 August 2015  225,000

Marketing costs                                                                    10,000

                                                                                        390,500

No amortisation has been charged on this amount. The fabric technology is estimated to have a three-year life before it is superseded by superior products.

Question 1: Explain the required IFRS financial reporting treatment of the above in the financial statements of each company. Submit all relevant calculations and set out the required adjustments in the form of journal entries.

Reference no: EM132606274

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