NMENT 52 2018-2.pdf (58.7 KB) CASE 3: Stark Ltd (12 marks) Stark Ltd manufacture
ID: 2337869 • Letter: N
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NMENT 52 2018-2.pdf (58.7 KB) CASE 3: Stark Ltd (12 marks) Stark Ltd manufactures eomponents for andio-visual systems and on 1 August 2017 commenced a project to design a more effective motion-sensing system. The following expenditures were outlaid during the course of research and development During September 2017, Stark Ltd paid s319,000 in salaries of company engineers and consultants to conduct tests on motion-sensing systems currently available in the market, with a view to making possible modifications and obtaining the knowledge. During November 2017, A new motion-sensing system was designed and a basic model produced at a cost of $215,000. This model was determined to be unsatisfactory as the materials of which it was made were not suitable. During January 2018, a further $101,000 was incurred in costs for the new motion-sensing system. Stark Ltd purchased a software for the motion-sensing system at a cost of $93,000.Explanation / Answer
ANSWER:
Any use brought about amid the exploration period of the item won't be promoted consequently the accompanying use will be expensed
1 Expenditure on Salaries of Engineers and experts will be expensed as it was brought about amid the reseach stage when financial advantages for the items didn't know.
2 $215,000 that was spent on fundamental model yet the model ends up being unsatisifactory thus the expense acquired for a similar will be expensed out as the item was not suitable in the market subsequently it can not be promoted
3 $101,000 brought about towards cost of new machine detecting framework and $93,000 acquired for the product of the sytem ought to likewise be expensed out as at this stage additionally there was no certainity that monetary advantages will stream to the organization.
4 $230,000 spent on new materials for taking a gander at the practicality of the item will likewise be expensed out as around then it was not sure that the item will be effective in the market.
5 $112,000 acquired after the affirmation that the suitable item is fabricated will be capitalied anyway $38,000 brought about on preparing of staff is expensed as it is particularly rejected by IASB 138.
6 $40,000 acquired to show and exhibit the new model to forthcoming clients is the offering expenese and consequently it is expensed out
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