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What is total amount to be capitalized as development costs

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Problem

Satellite Inc. incurred the following costs during the year ended December 31, 20X5:

Research costs aimed at discovery of new knowledge $360,000

Labour and materials costs for the design of a new product $97,000

Testing of the new product $38,000

Marketing costs incurred after testing $34,000

Purchase of special equipment (six-year useful life) on November 1, 20X5, to used in general R&D activities $830,000

The new product development has met the six specific conditions for recognition. Satellite uses the straight-line method for equipment depreciation. What is the total amount to be capitalized as development costs in 20X5?

a) $135,000

b) $158,056

c) $518,056

d) $529,000.

Reference no: EM131788437

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