In Year 1 in a project to develop Product X #3385

In Year 1 in a project to develop Product X, Lincoln Company incurred research and

development costs totaling $10 million. Lincoln is able to clearly distinguish the research phase
from the development phase of the project. Research-phase costs are $6 million, and
development-phase costs are $4 million. All of the IAS 38 criteria have been met for recognition
of the development costs as an asset. Product X was brought to market in Year 2 and is
expected to be marketable for five years. Total sales of Product X are estimated at more than
$100 million.Required:a. Determine the impact research and development costs have on
Lincoln Company's Year 1 and Year 2 income under (1) IFRS and (2) U.S. GAAP.b. Summarize
the difference in income, total assets, and total stockholders' equity related to Product X over its
five-year life under the two different sets of accounting rules.View Solution:
In Year 1 in a project to develop Product X

ANSWER
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