Hall Co. incurred research and development costs in 2011 as follows:
Materials used in research and development projects
Equipment acquired that will have alternate future uses in future research
and development projects
Depreciation for 2011 on above equipment
Personnel costs of persons involved in research and development projects
Consulting fees paid to outsiders for research and development projects
Indirect costs reasonably allocable to research and development projects
P 450,000
3,000,000
300,000
750,000
300,000
225,000
P5,025,000
The amount of research and development costs charged to Hall's 2011 income
statement should be
a. P1,500,000.
b. P1,900,000.
c. P2,025,000.
d. P4,500,000.
Loazia Inc. incurred the following costs during the year ended December 31, 2011:
Laboratory research aimed at discovery of new knowledge
Costs of testing prototype and design modifications
Quality control during commercial production, including routine testing
of products
Construction of research facilities having an estimated useful life of
6 years but no alternative future use
P180,000
45,000
270,000
360,000
The total amount to be classified and expensed as research and development in 2011 is
a. P555,000.
b. P855,000.
c. P585,000.
d. P285,000.
MaBelle Corporation incurred the following costs in 2010:
Acquisition of R&D equipment with a useful life of
4 years in R&D projects
Start-up costs incurred when opening a new plant
Advertising expense to introduce a new product
Engineering costs incurred to advance a product to full
production stage
P600,000
140,000
700,000
400,000
What amount should MaBelle record as research & development expense in 2010?
a. P 550,000
b. P 740,000
c. P1,000,000
d. P1,140,000
Leeper Corporation incurred the following costs in 2010:
Acquisition of R&D equipment with a useful life of
4 years in R&D projects
Cost of making minor modifications to an existing product
P800,000
140,000
Advertising expense to introduce a new product
700,000
Engineering costs incurred to advance a product to full
600,000
production stage
What amount should Leeper record as research & development expense in 2010?
a. P 800,000
b. P 940,000
c. P1,300,000
d. P1,640,000
Logan Company incurred P3,000,000 (P800,000 in 2009 and P2,200,000 in 2010) to develop a
computer software product. P1,000,000 of this amount was expended before
technological feasibility was established in early 2010. The product will earn future
revenues of P8,000,000 over its 5-year life, as follows: 2010 – P2,000,000; 2011 –
P2,000,000; 2012 – P1,600,000; 2013 – P1,600,000; and 2014 – P800,000. What
portion of the P3,000,000 computer software costs should be expensed in 2010?
a. P500,000.
b. P600,000.
c. P700,000.
d. P2,200,000.
Geller Inc. incurred P500,000 of capitalizable costs to develop computer software during 2011.
The software will earn total revenues over its 4-year life as follows: 2011 - P400,000;
2012 - P500,000; 2013 - P600,000; and 2014 - P500,000. What amount of the computer
software costs should be expensed in 2011?
a. P500,000
b. P100,000
c. P125,000
d. P175,000
Tripiani Inc. incurred P600,000 of capitalizable costs to develop computer software during 2011.
The software will earn total revenues over its 5-year life as follows: 2011 - P500,000;
2012 - P600,000; 2013 - P600,000; 2014 - P200,000; and 2015 - P100,000. What
amount of the computer software costs should be expensed in 2011?
a. P150,000
b. P120,000
c. P135,000
d. P200,000
During 2011, Leon Co. incurred the following costs:
Testing in search for process alternatives
P 350,000
Costs of marketing research for new product
250,000
Modification of the formulation of a process
510,000
Research and development services performed by Beck Corp. for Leon
425,000
In Leon's 2011 income statement, research and development expense should be
a. P510,000.
b. P935,000.
c. P1,285,000.
d. P1,535,000.
Riley Co. incurred the following costs during 2011:
P160,000
Significant modification to the formulation of a chemical product
Trouble-shooting in connection with breakdowns during commercial
150,000
production
200,000
Cost of exploration of new formulas
185,000
Seasonal or other periodic design changes to existing products
225,000
Laboratory research aimed at discovery of new technology
In its income statement for the year ended December 31, 2011, Riley should report
research and development expense of
a. P585,000.
b. P735,000.
c. P770,000.
d. P920,000.
a(P800,000 ÷ 4) + P600,000 = P800,000.
105.
c
P140,000 +P70,000 = P210,000.
*106.
c
(P1,500,000 – P500,000) × (P1,000,000 ÷ P4,000,000) = P250,000.
P250,000 + (P500,000 – P400,000) = P350,000.
*107.
c
(P3,000,000 – P1,000,000) × (P2,000,000 ÷ P8,000,000) = P500,000.
P500,000 + (P1,000,000 – P800,000) = P700,000.
*108.
c
P500,000 X ¼ = P125,000 (greater than P100,000).
*109.
a
P600,000 X P500,000 / P2,000,000 = P150,000 (greater than P120,000).
119.
c
P350,000 + P510,000 + P425,000 = P1,285,000.
120.
a
P160,000 + P200,000 + P225,000 = P585,000.