Serendipity Ltd is working on two independent research and development projects.Project A has recently been fruitful and the resulting product has been marketed,unfortunately with limited success.Development of the product is continuing in an effort to improve its marketability.Project B is due for product release in one year's time.The initial marketing surveys and forward contracts suggest that the outcome for this product is very favourable.The following information relates to the expenditures for the current period and budgeted figures for the next 3 years.All research costs in prior periods were expensed.The budgeted figures are considered accurate beyond a reasonable doubt. What is the research and development deferral for each project in 2013?

Question

Serendipity Ltd is working on two independent research and development projects.Project A has recently been fruitful and the resulting product has been marketed,unfortunately with limited success.Development of the product is continuing in an effort to improve its marketability.Project B is due for product release in one year's time.The initial marketing surveys and forward contracts suggest that the outcome for this product is very favourable.The following information relates to the expenditures for the current period and budgeted figures for the next 3 years.All research costs in prior periods were expensed.The budgeted figures are considered accurate beyond a reasonable doubt.  What is the research and development deferral for each project in 2013?

Quizplus · Accepted Answer

The research and development deferral for Project A is $30,000 (total expenditures of $55,000 minus the $25,000 recognized as an expense) and for Project B is $90,000 (total expenditures of $221,000 minus the $131,000 recognized as an expense).

Serendipity Ltd Is Working on Two Independent Research and Development