Thomas More Company incurred the following costs during the current year in conn

Question

Thomas More Company incurred the following costs during the current year in connection with its research and development activities.

Compute the amount to be reported as research and development expense by More on its current year income statement. Assume equipment is purchased at the beginning of the year.

$

Cost of equipment acquired that will have alternative    uses in future R&D projects over the next 5 years    (uses straight-line depreciation) $356,300 Materials consumed in R&D projects 59,220 Consulting fees paid to outsiders for R&D projects 117,600 Personnel costs of persons involved in R&D projects 139,200 Indirect costs reasonably allocable to R&D projects 45,540 Materials purchased for future R&D projects 36,410

Explanation / Answer

So Research & development Expenditure to be expensed in 2014:

Total R & D expenses $432820

Current Cost

•labour costs of R&D personnel (annual wages and salaries and all associated costs or fringe benefits) and

•other current costs (non-capital purchases of materials, supplies and equipment to support R&D, including water, gas and electricity; books, journals, reference materials, materials for laboratories such as chemicals or animals, costs for on-site consultants), costs for indirect services (e.g. security; storage; use, repair and maintenance of buildings and equipment; computer services, labour costs of non-R&D personnel).

If the costs relate to tangible assets that have an alternative future use, the company depreciates the costs over the assets’ projected lifetimes.

Depreciation on Equipment(356300/5) $71260 Materials consumed in R&D projects 59,220 Consulting fees paid to outsiders for R&D projects 117,600 Personnel costs of persons involved in R&D projects 139,200 Indirect costs reasonably allocable to R&D projects 45,540

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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