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

Difference between trading and profit and loss account, 1. Trading account ...

1. Trading account is prepared so as to calculate gross profit or loss, whereas the function of the profit and loss account is to disclose net profit or loss. 2. Trading account

What type of an asset is goodwill, What kinds of risks does a firm like Ama...

What kinds of risks does a firm like Amazon.com face with respect to safeguarding its assets? What types of controls do you think it already has in place to minimize these risks? G

Borrowing Costs, Applicaion of Specific And General Loan

Applicaion of Specific And General Loan

Attempts towards standardisation, Standardization in UK and USA: although ...

Standardization in UK and USA: although the Institute of Chartered Accountants in England and Wales began creating recommendations as 1942, real progress started along with the es

Accounting concepts, Accounting Concepts: The dual aspect principl...

Accounting Concepts: The dual aspect principle has specific relevance to balance sheet. According to this principal, every transaction is concerned as one that has dual ef

Accounting policy , As of 2005, consolidated financial statements of listed...

As of 2005, consolidated financial statements of listed companies in the European Union are required to be prepared in accordance with IFRSs. Complete the following accounting p

Current assets, Current Assets These are assets that will normally be ...

Current Assets These are assets that will normally be converted in cash within a year or inside the operating cycle. The operating cycle is the duration in time considered by

Sacred grounds coffee shop, To finish  this scenario, use the Confidence In...

To finish  this scenario, use the Confidence Interval Calculator Sheets 1,2,3. The Sacred Grounds coffee shop in Dead horse, AK, is considering changing its coffee brewing units

Data attributes for every entity, Make a new information system for this co...

Make a new information system for this company. Your solution should contain the following items: 1.  An overview of the primary features of the new system, describing why this

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