E12-17 (Accounting for R&D Costs) Thomas More Company incurred the following cos
ID: 2464662 • Letter: E
Question
E12-17 (Accounting for R&D Costs) Thomas More Company incurred the following costs during the current year in connection with its research and development activities. Cost of equipment acquired that will have alternative uses in future R&D projects over the next 5 years (uses straight-line depreciation) $280,000 Materials consumed in R&D projects 59,000 Consulting fees paid to outsiders for R&D projects 100,000 Personnel costs of persons involved in R&D projects 128,000 Indirect costs reasonably allocable to R&D projects 50,000 Materials purchased for future R&D projects 34,000 Instructions Compute the amount to be reported as research and development expense by More on its current year income statement. Assume equipment is purchased at the beginning of the year.
Explanation / Answer
Cost of equipment acquired that will have alternative uses in future research and development projects over the next 5 years
(uses straight-line depreciation) . (280,000/5)=56,000 56,000
Materials consumed in research and development projects 59,000
Consulting fees paid to outsiders for research and development projects 100,000
Personnel costs of persons involved in research and development projects 128,000
Indirect costs reasonably allocable to research and development projects 50,000
393,000
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