- This topic has 3 replies, 3 voices, and was last updated 14 years, 5 months ago by
.
-
Topic
-
This is question FA-0108 from the Wiley online test bank..
Korn Company incurred the following costs during 2010:
Modification to the formulation of a chemical product
$135,000
Troubleshooting in connection with breakdowns during commercial production
150,000
Design of tools, jigs, molds and dies involving new technology
170,000
Seasonal or other periodic design changes to existing products
185,000
Laboratory research aimed at discovery of new technology
215,000
In its income statement for the year ended December 31, 2010, Korn should report research and development expense of:
a.) $520,000
b.) $470,000
c.) $385,000
d.) $335,000
I chose answer c.) $385,000 which includes the $170,000 design of tools and $215,000 labratory research. Wiley says the answer is a.) $520,000 because you should include the $135,000 modification to the formulation of a chemical product. I was under the impresson from my Becker notes that reformulations of a chemical compound are not considered research and development expense. Is “modification to the formulation of a chemical product” different than “reformulation of a chemical compound”??
Any help would be appreicated!!
FAR - 87 (7/14/11)
AUD - 94 (8/31/11)
REG - 92 (10/19/11)
BEC - 88 (11/30/11)
- The topic ‘Research and Development Expense’ is closed to new replies.
