Business, 23.05.2021 04:40 2005briana

2. A local firm was contracted by an international firm to research and develop a hybrid plant that can adapt to a local climate. If successful, this will be launched as commercial undertaking which is expected to last for at least 10 years. All research and development costs will be fully reimbursed by the international
firm. During the year ended 31st December, 2019, a total expenditure of Nu. 670,000 were incurred to carry out the project. The project will continue for another 2 years. If successful, the patent right of the hybrid plant will be automatically owned and controlled by the international firm.
Required:
Explain how this cost will be treated in the books of the local firm when they prepare the financial statements for the year ended 31 December 2019. Share
your workings with the class.

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2. A local firm was contracted by an international firm to research and develop a hybrid plant that...

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