Non-Current assets

[Revenue]

hi

A Companies accounting year is 31 December 2009. Sales of a new product whose development costs totalled $500,000 began on 1 October 2009 and are expected to continue 5 years from that date. All IAS 38 criteria for defferal have been met in full. The cost of $500,000 includes new production plant costing $50.000

The correct answer is 427,500

Cost $500,000 - $50,000 = $450,000

Amortisation 450,000/60*3 = $22,500

Unamprtised expenditure = 450,000 - 22,500 = 427,500

i can not understand what is 60 means, how do they get it?

could somebody explain me

[hariharm]

60 refers to the number of months i.e. 5 years *12, since that is the period over which the amortization should take place. In the same formula, the 3 is the number of months between Oct 1 and Dec 31.

Hope this helps.

[Revenue]

thank you hariharm.