3. Consider the following information from a company\'s records for the current

Question

3. Consider the following information from a company's records for the current year: Feb. 1 Purchased materials exclusively for use in R&D; projects Of these materials, 30% are left at the end of the year and will be used in the same project next year (they have no alternative use). $ 85,000 Aug. 28 Construction costs for a new research facility that has been placed in use on this date and is expected to be used to house multiple R & D activities for 20 years. The facility has no expected salvage value. 600,000 Purchased an experimental machine from an inventor. The machine is expected to be used for a particular R&D; activity for two years, after which it will have no residual value. Aug. 29 16,000 Nov. 26 Salaries paid to employees involved in R&D; Required: Compute the amount of R&D; expense for the current year. The company normally uses 35,000 straight-line depreciation for plant assets.

Explanation / Answer

Computation of R & D expense for current year Date    Particulars    Calculation    Amount Feb 11. Materials used in R&D Projects 85,000*0.70 59500 Aug 28.   Construction Cost 6,00,000/20 30000 Aug 29. Experimental Machine 16000/2 8000 Nov 26. Salaries to Employees 35000 Total 132500

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