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Intangible Assets Software

The document describes research and development costs incurred by Hall Co. in 2011, including materials, equipment, personnel costs, consulting fees, and indirect costs totaling $5,025,000. It asks which amount should be charged to the 2011 income statement. The correct answer is $1,900,000, which excludes the equipment amount of $3,000,000 since that will have future uses. It also provides costs incurred by two other companies, Loazia Inc. and MaBelle Corporation, and asks which amounts should be classified and expensed as research and development for each.

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Zerjo Cantalejo
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519 views

Intangible Assets Software

The document describes research and development costs incurred by Hall Co. in 2011, including materials, equipment, personnel costs, consulting fees, and indirect costs totaling $5,025,000. It asks which amount should be charged to the 2011 income statement. The correct answer is $1,900,000, which excludes the equipment amount of $3,000,000 since that will have future uses. It also provides costs incurred by two other companies, Loazia Inc. and MaBelle Corporation, and asks which amounts should be classified and expensed as research and development for each.

Uploaded by

Zerjo Cantalejo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Hall Co.

incurred research and development costs in 2011 as follows:


Materials used in research and development projects
P 450,000
Equipment acquired that will have alternate future uses in future research
and development projects
3,000,000
Depreciation for 2011 on above equipment
300,000
Personnel costs of persons involved in research and development projects
750,000
Consulting fees paid to outsiders for research and development projects
300,000
Indirect costs reasonably allocable to research and development projects
225,000
P5,025,000
The amount of research and development costs charged to Hall's 2011 income
statement should be
a. P1,500,000.
b. P1,900,000.
c. P2,025,000.
d. P4,500,000.

Loazia Inc. incurred the following costs during the year ended December 31, 2011:
Laboratory research aimed at discovery of new knowledge
Costs of testing prototype and design modifications
Quality control during commercial production, including routine testing
of products
Construction of research facilities having an estimated useful life of
6 years but no alternative future use

P180,000
45,000
270,000
360,000

The total amount to be classified and expensed as research and development in 2011 is
a. P555,000.
b. P855,000.
c. P585,000.
d. P285,000.
MaBelle Corporation incurred the following costs in 2010:
Acquisition of R&D equipment with a useful life of
4 years in R&D projects
P600,000
Start-up costs incurred when opening a new plant
140,000
Advertising expense to introduce a new product
700,000
Engineering costs incurred to advance a product to full
production stage
400,000
What amount should MaBelle record as research & development expense in 2010?
a. P 550,000
b. P 740,000
c. P1,000,000
d. P1,140,000
Leeper Corporation incurred the following costs in 2010:
Acquisition of R&D equipment with a useful life of
4 years in R&D projects
Cost of making minor modifications to an existing product

P800,000
140,000

Advertising expense to introduce a new product


700,000
Engineering costs incurred to advance a product to full
production stage
600,000
What amount should Leeper record as research & development expense in 2010?
a. P 800,000
b. P 940,000
c. P1,300,000
d. P1,640,000

Logan Company incurred P3,000,000 (P800,000 in 2009 and P2,200,000 in 2010) to develop a
computer software product. P1,000,000 of this amount was expended before
technological feasibility was established in early 2010. The product will earn future
revenues of P8,000,000 over its 5-year life, as follows: 2010 P2,000,000; 2011
P2,000,000; 2012 P1,600,000; 2013 P1,600,000; and 2014 P800,000. What
portion of the P3,000,000 computer software costs should be expensed in 2010?
a. P500,000.
b. P600,000.
c. P700,000.
d. P2,200,000.
Geller Inc. incurred P500,000 of capitalizable costs to develop computer software during 2011.
The software will earn total revenues over its 4-year life as follows: 2011 - P400,000;
2012 - P500,000; 2013 - P600,000; and 2014 - P500,000. What amount of the computer
software costs should be expensed in 2011?
a. P500,000
b. P100,000
c. P125,000
d. P175,000
Tripiani Inc. incurred P600,000 of capitalizable costs to develop computer software during 2011.
The software will earn total revenues over its 5-year life as follows: 2011 - P500,000;
2012 - P600,000; 2013 - P600,000; 2014 - P200,000; and 2015 - P100,000. What
amount of the computer software costs should be expensed in 2011?
a. P150,000
b. P120,000
c. P135,000
d. P200,000
During 2011, Leon Co. incurred the following costs:
Testing in search for process alternatives
P 350,000
Costs of marketing research for new product
250,000
Modification of the formulation of a process
510,000
Research and development services performed by Beck Corp. for Leon
425,000
In Leon's 2011 income statement, research and development expense should be
a. P510,000.
b. P935,000.
c. P1,285,000.
d. P1,535,000.

Riley Co. incurred the following costs during 2011:


Significant modification to the formulation of a chemical product
Trouble-shooting in connection with breakdowns during commercial
production
Cost of exploration of new formulas
Seasonal or other periodic design changes to existing products
Laboratory research aimed at discovery of new technology

P160,000
150,000
200,000
185,000
225,000

In its income statement for the year ended December 31, 2011, Riley should report
research and development expense of
a. P585,000.
b. P735,000.
c. P770,000.
d. P920,000.
a(P800,000 4) + P600,000 = P800,000.
105.

P140,000 +P70,000 = P210,000.

*106.

(P1,500,000 P500,000) (P1,000,000 P4,000,000) = P250,000.


P250,000 + (P500,000 P400,000) = P350,000.

*107.

(P3,000,000 P1,000,000) (P2,000,000 P8,000,000) = P500,000.


P500,000 + (P1,000,000 P800,000) = P700,000.

*108.

P500,000 X = P125,000 (greater than P100,000).

*109.

P600,000 X P500,000 / P2,000,000 = P150,000 (greater than P120,000).

119.

P350,000 + P510,000 + P425,000 = P1,285,000.

120.

P160,000 + P200,000 + P225,000 = P585,000.

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