Janson Pharmaceuticals incurred the following costs in 2011 related to a new can

Question

Janson Pharmaceuticals incurred the following costs in 2011 related to a new cancer drug:

research for new formulas - $2,425,000
Development of a new formula - $1,600,000
Legal and filing fees for a patent for the new formula - $60,000
Total ----- $4,085,000



The development costs 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 drug was patented before the end of the 2011 fiscal year.

1.


Calculate the amount of research and development expense Janson should report in its 2011 income statement related to this project.


2.


Repeat requirement 1 assuming that Janson prepares its financial statements according to International Financial Reporting Standards.

Explanation / Answer

1. Research Expense would be (2,425,000) Development Expense would be (1,600,000) Legal and filing fees would not be included because this is after development of the solution for the IAS. 2. For IFRS, one would include the legal and filing fees. I'm pretty sure about this since IAS was established prior to IFRS.

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.