Accounting Treatment of Research and Development Project

FINANCIAL
ACCOUNTING
ASSIGNMENT

1
By student name
Professor
University
Date: 25 April 2018.
Executive Summary
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In the given case, Technology Enterprises Ltd. is one of the company which is listed
and did start a research and development project in July 2017 in order to modify the
method of recharge of batteries in all its products. The product got fully completed
in June 2018 and the company applied for the patent on behalf of the same. The
company is planning to modify the entire product range in the coming 2 years and
therefore has incorporated the same in the financial budget of the company. The
company is expecting to derive the economic benefit from the new technology on
battery recharging for the next 10 years. The accountant of the company was not
sure on the treatment of the salaries given to the engineer and therefore he used
the New R&D expenses to accumulate the salaries for the year ended 30th June
2018. The value in use as per present value as well as fair value of the design has
been given.
The report below covers how the project should be accounted in the financial
statements for the year ended 30th June 2018 in reference of the relevant
accounting standards. The report also highlights the rules and restrictions which are
mentioned in AASB 138 which compromise the comparability of the financial
statements. Lastly a response has been drafted for the CFO highlighting the points
which will help in mitigating the concerns regarding investor grievance on the
information presented in the financial statements.
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