í 4%20Finaf%20barns%20(1).pdf Page 4 Question 3 (15 MARKS) A. Gizmo Inc. develop
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í 4%20Finaf%20barns%20(1).pdf Page 4 Question 3 (15 MARKS) A. Gizmo Inc. develops, produces and markets laser machines for medical uses. For each of the following expenditures related to the laser machine activities, select the recommended scounting trestment from t all. 5 marks the list provided. An accounting treatment may be used once, more than once or not at Laser Machine related Expenditures Accounting Treatment I Expense immediately as R&D; Il Expense as operating expense III Capitalize then expense as R&D; IV Not recorded 1. Commission to sales staff marketing new laser machine Engineering costs incarred to advance the 3. Cost of the marketing research to promote 4 Executive managers slaries h. Material and overhead cost of the prototype 2 laser machine to fuill production stage (economie vability achieved) the new laser machine 5. Coss of testing prototype laser machine (economic viability not achieved) laser machine (ecosomic viability not chieved) . Salaries of research staff designing new 8. Acquisition of equipment for se on current laser machine and future R&D; peojedts relating to laser machincs Noquisition of equipaent for use on current project relting to laser machines Construction of a 4K,,000 sq. ft, building to house new aewarch facility for usc in curment and futsre peojects 10.Explanation / Answer
1) Expense as operating expense.
2) Capitalize then expense as R & D
3) Expense Immediately as R & D
4) Expense as operating expense
5) Expense as operating expense
6) Expense as operating expense
7) Capitalize then expense as R & D
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