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

Changing nature of generally accepted accounting principles, GAAP are usual...

GAAP are usually developed through professional accounting bodies as American Institute of Certified Public Accountants (AICPA) and ICAI that is Institute of Chartered Accountants

Human resource accounting, QUESTION The recognition of human capital by...

QUESTION The recognition of human capital by modern businesses has led to the development of Human Resource Accounting (HRA) Required- (a) Explain the following terms-

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

Imputed interest, Imputed Interest - If no interest or an unrealistic amoun...

Imputed Interest - If no interest or an unrealistic amount of interest is charged in a salve involving certain kinds of deferred payments, then transaction would be treated as if r

Securities and exchange commission, Formed under the Securities and Exchang...

Formed under the Securities and Exchange Act of 1934 the SEC (Securities and Exchange Commission) is a government agency that administers important acts dealing with the interstate

confidence interval calculator sheets, To finish this scenario, use the Co...

To finish this scenario, use the Confidence Interval Calculator Sheets 1,2,3 and the Area Gas Prices - Random Sample Excel file, linked in the Resources. The Minneapolis Star Tr

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

Rohan., A firm of manufactures, whose books are closed on 31st December, pu...

A firm of manufactures, whose books are closed on 31st December, purchased machinery for Rs.50,000 on 15 January, 2010. Additional Machinery was acquired for Rs.10,000 on 1st July,

Exploration costs, are exploration costs assets to Mining companies?

are exploration costs assets to Mining companies?

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