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Cromartie Ltd. prepares its financial statements according to International Financial Reporting Standards. During 2021 the company incurred $1,245,000 in research expenditures to develop a new product. An additional $756,000 in development expenditures were incurred after technological and commercial feasibility was established and after the future economic benefits were deemed probable. The project was successfully completed and the new product was patented before the end of the 2021 fiscal year. Sale of the product began in 2020. What amount of the above expenditures would Cromartie expense in its 2021 income statement

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Answer: $1,245,000

Explanation:

Going by IFRS standards, Research and Development Costs should be expensed as incurred so long as commercial feasibility has not been established.

Once this is established however, the costs after that are to be capitalized. In this scenario, the costs before feasibility are $1,245,000 so these costs are going to be expensed as periodic costs.

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