Cromartie Ltd.prepares its financial statements according to International Financial Reporting Standards.During 2016 the company incurred $1,245,000 in research expenditures to develop a new product.An additional $756,000 in development expenditures were incurred after technological and commercial feasibility was established and after the future economic benefits were deemed probable.The project was successfully completed and the new product was patented before the end of the 2016 fiscal year.Sale of the product began in 2015.What amount of the above expenditures would Cromartie expense in its 2016 income statement?

Question

Quizplus · Accepted Answer

Under IFRS, research expenditures are expensed as incurred. Therefore, the $1,245,000 in research expenditures would be expensed in the 2016 income statement. Development expenditures can be capitalized once certain criteria are met, but the research costs must be expensed.