Development costs in its financial statements , Accounting Standards

Assignment Help:

AB Limited is a manufacturing entity that runs a number of operations including a bottling plant that bottles carbonated soft drinks. AB has been developing a new bottling process that will allow the bottles to be filled and sealed more efficiently.

The new process took a year to develop. At the start of development, AB estimated that the new process would increase output by 15% with no additional cost (other than the extra bottles and their contents). Development work commenced on 1 May 2011 and was completed on 20 April 2012. Testing at the end of the development confirmed AB's estimates.

AB incurred expenditure of £280,000 on the above development in 2011/12.

AB plans to install the new process in its bottling plant and start operating the new process from 1 May 2012.

AB's balance sheet is 30 April.

Required:

(a)  Using IAS 38-Intangible Assets, carefully describe how AB should recognise and treat its development costs in its financial statements for the year ended 30 April 2012.


Related Discussions:- Development costs in its financial statements

Financial statement, describe why a high stock turnover is considered to be...

describe why a high stock turnover is considered to be a good thing

Explain the meaning of social accounting, QUESTION Social accounting is...

QUESTION Social accounting is a way of measuring and reporting on an organisation's social and ethical performance. It is principally concerned with offering a complementary fo

Ias, last changes in accounting standard in aias?

last changes in accounting standard in aias?

Types of business activities, Q. Types of business activities? An accou...

Q. Types of business activities? An accounting education is perfect for providing this versatile background. Additionally to providing a good foundation for entrepreneurship in

Goodwill., Dear Sir, I am an accountant working in a company with limited ...

Dear Sir, I am an accountant working in a company with limited liability (WLL), one of the partners (A) will withdraw from our company. One of the existing partner (B) of the comp

Ratio measures a business'' average payment period, Which ratio measures a ...

Which ratio measures a business' average payment period? A.  current ratio   B.  liquid ratio C.  trade payables turnover   D.  trade receivables turnover

Classification of balance sheets items, The balance sheet lists assets, cap...

The balance sheet lists assets, capital and liabilities separately. This is an accepted convention about the assets and liabilities are demonstrated in sub groups and listed in the

Profit and loss account, Loss and Profit Account is prepared so as to disce...

Loss and Profit Account is prepared so as to discern whether the firm has made net profit or suffered net loss for a specified accounting period. Such account deals along with indi

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd