Suppose a company spends $100,000 in the current year to research and develop a safety device for motorcycles. By the end of the year, the company estimates that the new safety device has an 80% chance of generating $300,000 in revenues from sales to customers over the next five years. For what amount would Research and Development Expense be reported in the current year?

So for reporting the Research and Development Expense we considered only the spending amount for research and develop a safety device for motorcycles i.e $100,000

Hence, the other information which is given is not relevant. Therefore, ignored it

marvineetesh3 marvineetesh3 · Answer 2 · 2022-03-07T10:17:18+01:00

The research and development expenses reported in the current year is $100,000.

What is expenses?

Expenses is defined as the outflow of money that is paid, means cost incurred for requiring something.

Example: Amount paid for purchasing of machine.

Computation of the amount of RAD for current year:

According to the given case, the data provided are:

Spending amount for RAD = $100,000

RAD = Research and development expenses.

Chance = 80%

Revenues generated = $300,000

The amount considered for reporting the research and development expenses is $100,000, because we consider only those amount that is spent or paid in current year.

Therefore, the RAD for the current year would be $100,000 and the another information is not relevant for finding the amount of research and development.

Learn more about expenses, refer to:

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