Question:
Moxie Corporation incurs research and development costs of $710,000 in 2013, 20 percent of which relates to development activities subsequent to certain criteria having been met that suggest that an intangible asset has been created. The newly developed product is brought to market in January 2014 and is expected to generate sales revenue for 10 years.
a. Determine the amount Moxie should recognize as research and development expense in 2013 under (1) U.S. GAAP and (2) IFRS.
b. Determine the adjustments that Moxie would make in 2013 and 2014 to reconcile net income and stockholders' equity under U.S. GAAP to IFRS. (Input all amounts as positive values.)