During Its First Year of Operation,Dovery Company Incurred $345,000 of Research

question 91

Multiple Choice

During its first year of operation,Dovery Company incurred $345,000 of research costs undertaken with the prospect of gaining new technical understanding about a new nanotechnology procedure.An additional $515,000 was incurred to develop a production process to use that new technology to produce a new lubricant product.Under IFRS,which of the following is the appropriate accounting for these costs?

• A)capitalize $860,000 as an intangible asset
• B)expense $345,000 and capitalize $515,000 as an intangible asset
• C)expense $515,000 and capitalize $345,000 as an intangible asset
• D)Any of these options can be appropriate under IFRS.

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Definitions:

International Trade

The exchange of goods, services, and capital between countries and territories, influenced by international agreements, tariffs, and economic policies.

Precautionary Principle

A strategy to cope with possible risks where scientific understanding is yet incomplete, favoring preventive action in the face of uncertainty.

Non-Native Species

Species that are brought into a new habitat where they do not naturally occur, potentially causing harm to the native species and ecosystems.

Ecosystem

A biological community of interacting organisms and their physical environment.