Booster Company has been researching into new ways of manufacturing their products. The costs and results of a recent project are as follows: Period 2010 2011 January to June 2011 July to December 2012 Costs P 6,000,000 9,000,000 14,000,000 nil Description General research Development stage 1 Development stage 2 New process adopted in the factory Development began in January 2011, but it was only in July 2011 that it became apparent that the process
Booster Company has been researching into new ways of manufacturing their products. The costs and results of a recent project are as follows:
|
Period 2010 2011 January to June 2011 July to December 2012 |
Costs P 6,000,000 9,000,000 14,000,000 nil |
Description General research Development stage 1 Development stage 2 New process adopted in the factory |
Development began in January 2011, but it was only in July 2011 that it became apparent that the process would be successful and that it would save the company a lot of money. The new process will probably be used for ten years from January 2012, saving about P4,000,000 per annum. The process is protected by patent for seven years, after which time most of Booster’s rivals will adopt the process.
What is the carrying value of the development expenditure on December 31, 2012?
a. P 23,000,000
b. P 29,000,000
c. P 9,000,000
d. P 14,000,000
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