Research Corp., a publicly accountable entity, incurred the following costs in its research and development division: $$\begin{array} { | l | r | r | }
\hline & \text { Jan 1 - July 31, 2021 } & \text { Aug 1- Dec. 31, 2021 } \
\hline \text { Materials } & 10,000 & 12,000 \
\hline \text { Labour costs } & 15,000 & 32,000 \
\hline \text { Directly attributable overhead } & 8,000 & 15,000 \
\hline
\end{array}$$ At July 31, 2021, Research Corp. determined that the project was technically feasible and commercially viable. Research Corp. had sufficient resources and intentions to complete the project and was confident that there was demand in the marketplace for the product. How much, if any, of the costs can be capitalized for fiscal 2021?
A)$0
B)$44,000
C)$59,000
D)$92,000

Question

Research Corp., a publicly accountable entity, incurred the following costs in its research and development division: $$\begin{array} { | l | r | r | } 
\hline & \text { Jan 1 - July 31, 2021 } & \text { Aug 1- Dec. 31, 2021 } \
\hline \text { Materials } & 10,000 & 12,000 \
\hline \text { Labour costs } & 15,000 & 32,000 \
\hline \text { Directly attributable overhead } & 8,000 & 15,000 \
\hline
\end{array}$$ At July 31, 2021, Research Corp. determined that the project was technically feasible and commercially viable. Research Corp. had sufficient resources and intentions to complete the project and was confident that there was demand in the marketplace for the product. How much, if any, of the costs can be capitalized for fiscal 2021?
A)$0
B)$44,000
C)$59,000
D)$92,000

Quizplus · Accepted Answer

According to the question, Research Corp. determined that the project was technically feasible and commercially viable as of July 31, 2021. Therefore, any costs incurred prior to July 31, 2021, cannot be capitalized. The costs incurred from August 1, 2021, until December 31, 2021, can be capitalized as they were incurred while the project was in the development stage after technical and commercial feasibility was established. So, the total amount of costs that can be capitalized for fiscal 2021 is $59,000 (i.e., $12,000 + $32,000 + $15,000). Option C is correct.

Research Corp At July 31, 2021, Research Corp