Janson Pharmaceuticals incurred the following costs in 2013 related to a new cancer drug:
Research for new formulas $ 2,425,000
Development of a new formula 1,600,000
Legal and filing fees for a patent for the new formula 60,000
Total $ 4,085,000
The development costs 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 drug was patented before the end of the 2013 fiscal year.
1. Calculate the amount of research and development expense Janson should report in its 2013 income statement related to this project.
2. Calculate the amount of research and development expense Janson should report in its 2013 income statement related to this project. Assuming that Janson prepares its financial statements according to International Financial Reporting Standards.