Research and Development Costs
Response to the following problem:
Cressman Company incurred research and development costs for various projects in 2010 as follows:
Materials used for research $ 240,000
Materials used for development 160,000
Equipment acquired that will have alternative uses in future research projects for four years 2,000,000
Personnel costs of employees involved in research 600,000
Personnel costs of employees involved in development 400,000
Consulting fees paid to outsiders for research 20,000
Consulting fees paid to outsiders for development 80,000
Indirect costs reasonably allocable for research 130,000
Indirect costs reasonably allocable for development 70,000
Required
1. What is the amount of Cressman's research and development expenses for 2010 if it uses U.S. GAAP?
2. How would your answer change if Cressman uses IFRS? Assume that the company can demonstrate that the projects are expected to generate future economic benefits.