Question

Exercise 12-17 Crane Company incurred the following costs during the current year in connection with its research and development activities. Cost of equipment acquired that will have alternative uses in future R&D projects over the next 5 years (uses straight-line depreciation) $280,500 Materials consumed in R&D projects 55,100 Consulting fees paid to outsiders for R&D projects 111,000 Personnel costs of persons involved in R&D projects 131,500 Indirect costs reasonably allocable to R&D projects 45,100 Materials purchased for future R&D projects 32,100 Compute the amount to be reported as research and development expense by Crane on its current year income statement. Assume equipment is purchased at the beginning of the year.

Total to be expensed for research and Development $__________

Answer 1

Solution:-

Particulars	Amount
Cost of equipment acquired that will have alternative uses in future R&D projects over the 5 years ( $280,500 ÷ 5years)	$56100
Materials consumed in R&D Project	$55100
Consulting fees paid to outsideas for R&D projects	$111,000
Personal costs of persons involved in R &D projects	$131,500
Indirect costs reasonably allowable to R&D projects	$45100
Total costs to be expensed for research and development	$398,800