Question

Janson Pharmaceuticals incurred the following costs in 2018 related to a new cancer drug: Research for...

Janson Pharmaceuticals incurred the following costs in 2018 related to a new cancer drug:

Research for new formulas $ 2,485,000
Development of a new formula 1,660,000
Legal and filing fees for a patent for the new formula 66,000
Total $ 4,211,000


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 2018 fiscal year.

Required:
1. Calculate the amount of research and development expense Janson should report in its 2018 income statement related to this project.
2. Calculate the amount of research and development expense Janson should report in its 2018 income statement related to this project. Assuming that Janson prepares its financial statements according to International Financial Reporting Standards.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer:

1. We have,

According to US G.A.A.P, Janson report the following cases

Particulars Amount($)
Research for new formula 2,485,000
Development of a new formula 1,660,000
Total 4,145,000

Here Legal fees will be capitalized as intangible assests.

Therefore,Janson report the resarch and developmnet expense in its 2018 income statement is $4145000

2) We have,

According to (IFRS) International Financial Reporting Standards,

Research and development expense consider only the Research for new formula in given problem that is $2485000.

The remaining two costs are used for development of a new formula

Here also Legal fee will be used as intangible assests.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Maxtor Technology incurred the following costs during the year related to the creation of a new...
Maxtor Technology incurred the following costs during the year related to the creation of a new type of personal computer monitor: Salaries $ 420,000 Depreciation on R&D facilities and equipment 225,000 Utilities and other direct costs incurred for the R&D facilities 86,000 Patent filing and related legal costs 42,000 Payment to another company for performing a portion of the development work 220,000 Costs of adapting the new monitor for the specific needs of a customer 100,000 What amount should Maxtor...
Calculator The Lane Company incurred the following expenditures in January 2016: (1) research and development costs...
Calculator The Lane Company incurred the following expenditures in January 2016: (1) research and development costs of $510,000 that resulted in a new product that was patented during the year, (2) $12,000 in legal fees to have the patent registered, (3) $100,000 in advertising costs to develop a trademark for the newly patented product, (4) Legal fees of $8,000 incurred with the registration of the trademark, which will only be used for five years, and (5) $25,000 of advertising costs...
Carla Vista Company incurred the following costs during the current year in connection with its research...
Carla Vista 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) $289,500 Materials consumed in R&D projects 56,900 Consulting fees paid to outsiders for R&D projects 129,000 Personnel costs of persons involved in R&D projects 121,500 Indirect costs reasonably allocable to R&D projects 46,900 Materials purchased for future R&D projects 33,900...
In year 1, in a project to develop product X, Lincoln company incurred research and development...
In year 1, in a project to develop product X, Lincoln company incurred research and development cost totaling $10 million. Lincoln is able to clearly distinguish the research phase from the development phase of the project. Research- phase costs are $6million, and development - phase costs are $4millon, All of the IAS 38 criteria have been met for recognition of the development costs. Product X was brought to market in year 2 and its expected to be marketable for five...
During 2017, Metlock Corporation spent $550,000 in research and development costs. As a result, a new...
During 2017, Metlock Corporation spent $550,000 in research and development costs. As a result, a new product was patented. The patent was obtained on July 1, 2017 and had a legal life of 20 years and useful life of 10 years. Legal costs of $140,000 related to the patent were incurred as of July 1, 2017. (1.) Prepare journal entries (4) required for 2017 and 2018. On October 1, 2019, Metlock spent $120,000 to successfully defend a patent infringement case...
1-B&B Cancer Center of Dallas incurred the following costs during the year: Research and development costs...
1-B&B Cancer Center of Dallas incurred the following costs during the year: Research and development costs $222,000 Patent 122,500 Trademark 27,500 Marketing costs 40,000 Purchase of MRI 162,750 How much of these costs should be capitalized? $574,750 $264,750 $312,750 $150,000 2. Which of the following is correct regarding the process of benchmarking? It occurs when a company increases the price of its products and reduces operating expenses. It enhances financial analysis by comparing a company’s financial ratios with those of...
Exercise 12-17 Crane Company incurred the following costs during the current year in connection with its...
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...
During 2013, Martinez Corporation spent $155,520 in research and development costs. As a result, a new...
During 2013, Martinez Corporation spent $155,520 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2013, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $28,080 related to the patent were incurred as of October 1, 2013. On June 1, 2015, Martinez spent $20,160 to successfully prosecute a patent infringement suit. As a result, the...
1. Southridge Company incurred the following costs related to its purchase of a new assembly line:...
1. Southridge Company incurred the following costs related to its purchase of a new assembly line: Purchase cost: Php 9,435,000 (including Php 435,000 freight and purchase taxes) Recoverable purchase taxes: Php 960,000 Irrecoverable purchase taxes: Php 870,000 Installation of assembly line: Php 975,000 Training of employees: Php 195,000 Estimated repair and maintenance costs over useful life: Php 500,000 What is the amount to be recognized as asset related to the assembly line? a. Php 11,280,000 b. Php 9,450,000 c. Php...
Suddenly Salad had the following expenditures related to developing its trademark. General advertising costs $ 370,000...
Suddenly Salad had the following expenditures related to developing its trademark. General advertising costs $ 370,000 Advertising specifically focused on trademark development 111,000 Legal fees to register trademark 55,700 Registration and design fees for the trademark 34,900 Legal fees for successful defense of the new trademark 31,400 Total $ 603,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the trademark. Management contends that all of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT