Question

Question: Treasure Land Corporation incurred the following costs in 2017.

Cost of laboratory research aimed at the discovery of new knowledge	\(120,000
Cost of testing in search for product alternatives	100,000
Cost of engineering activity required to advance the design of a product to the manufacturing stage	210,000
Prototype testing subsequent to meeting economic viability	75,000
	\)505,000

Prepare the necessary 2017 journal entry(ies) for Treasure Land.

Short answer

Answer

Intangible asset is $75,000.

Step-by-step solution

Meaning of Research and Development (R&D)

R&D is the process through which a corporation seeks out fresh information that it can use to produce new technologies, goods, services, or systems that it can use or sell. Adding to the company's bottom line is frequently the aim.

Preparing journal entries

Date	Particular	Debit ($)	Credit ($)
	Research and Development Expense	430,000
	Intangible Assets	75,000
	Accounts Payable		505,000