Glass 4 Windows Is Involved in a Research and Development

question 18

Multiple Choice

Glass 4 Windows is involved in a research and development project to create a filtering window that removes the need for curtains. For the current year ended 30 June 2004 expenditure on the project is as follows:

The window is expected to earn revenues of $70,000 per year for the 10 years commencing 1 July 2004. Assuming straight-line amortisation, how much of the research and development cost should be expensed this period and what amount should be amortised in the year ended 30 June 2007?

• A) Expensed in 2004: $58,500 Amortisation in 2007: $58,500
• B) Expensed in 2004: $235,000 Amortisation in 2007: $35,000
• C) Expensed in 2004: $235,000 Amortisation in 2007: $28,000
• D) Expensed in 2004: $350,000 Amortisation in 2007: $23,500
• E) None of the given answers.