Question

Blue Corporation is a manufacturing company which has decided to introduce a new line of merchandise on January 25, 2019. The company has experienced significant revenue and earnings growth in recent years and anticipates future growth to decline slightly, yet remain consistent with the strong industry average (10-15% annual revenue growth). Blue has incurred certain patent costs and considerable attorney fees, in addition to survey costs, management studies, salaries, insurance, and quality inspections.
Given the three alternative methods for handling research and experimental expenditures, which method(s) would be most appropriate for Blue Corporation? Explain Why? How should Blue Corporation’s manufacturing expenditures be reported?

Answer 1

Answer:

Throughout the clarification category following the table, the definition of the concern is listed.

Explanation:

(1)

Quantitative surveys will now be the safest approach.

• Questionnaire fees including patent fees become traceable as research spending, and progress is in estimates.
• This approach is used where a numerical production that helps to address analysis questions needs to be established.
• If one wants a concrete statistic to justify the study, it is a very effective market research tool.

(2)

The cost incurred shall be recorded in compliance with IND AS 38 if because when the study, as well as surveys, are performed.