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KTA incurred research and development costs of $500,000 in 2017 of which $100,00

ID: 2530840 • Letter: K

Question

KTA incurred research and development costs of $500,000 in 2017 of which $100,000 of these costs relate to development activities because certain criteria have been met which suggest that an intangible asset has been created.

What amount should be recognized as research and development expense in 2017 using U.S. GAAP?

What amount should be recognized as research and development expense in 2017 using IFRS?

As a result of research and development costs, what is the difference in income between using

U.S. GAAP and IFRS in 2017?

As a result of research and development costs, what is the difference in Stockholder's equity between

reporting using U.S. GAAP and IFRS in 2017?

Explanation / Answer

1) Amount should be recognized as research and development expense in 2017 using U.S. GAAP - $500,000
2) Amount should be recognized as research and development expense in 2017 using IFRS ($500,000 - $100,000)= $400,000
3) U.S. GAAP income is $100,000 Lower.
4) U.S. GAAP Shareholder's Equity is $100,000 Lower