Solivan Corp. incurred the following costs during the current year: Construction
ID: 2397583 • Letter: S
Question
Solivan Corp. incurred the following costs during the current year:
Construction of preproduction prototypes
$180,000
Testing in search of process alternatives
110,000
Design of tools, jigs, molds, and dies
involving new technology
115,000
Engineering follow-through in an early
phase of commercial production
80,000
Seasonal or other periodic changes to
existing products
105,000
In its income statement, Solivan should report research and development expense of
$295,000
$405,000
$375,000
$370,000
Construction of preproduction prototypes
$180,000
Testing in search of process alternatives
110,000
Design of tools, jigs, molds, and dies
involving new technology
115,000
Engineering follow-through in an early
phase of commercial production
80,000
Seasonal or other periodic changes to
existing products
105,000
Explanation / Answer
Correct answer is option B.$405,000
Calculation of Research and Development Expenses to be report in Income statement
Construction of preproduction prototypes $180,000
Testing in search of process alternatives $110,000
Design of tools, jigs, molds, and dies
involving new technology $115,000
TOTAL R&D Expenses $405,000
Note:-
Engineering follow-through in an early
phase of commercial production
&
Seasonal or other periodic changes to
existing products
ARE EXCLUDED from calculating R& D Expenses.
Design of tools, jigs, molds, and dies
involving new technology $115,000
TOTAL R&D Expenses $405,000
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