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CASE STUDY (1): You have been recently appointed as the Senior Accountant for ALRawda company, a listed company which prepares financial statements in accordance with International Financial Reporting Standards (IFRS). You have recently produced a draft of the financial reports for the year ended 31 July 2018. Mr. Ahmed Mansoor, the CEO, reviewed these financial reports and is seeking your explanation on the following issue: "As you know, until July 2018 we spent considerable amounts of money designing a new product. We spent the six months from October 2017 to March 2018 researching into the feasibility of the product. We charged these research costs as expenses. From April 2018, we were confident that the product would be successful and economically feasible and we decided to fully develop the product. We spent most of the rest of the year developing the product, which we will begin to sell in the next few months. These development costs have been recognised as an intangible asset in our balance sheet. How can this be justified when all these research and development costs are design costs?" Required: Please draft a report responding to Mr. Ahmed Mansoor in terms of explaining how some R&D costs are expensed, while others are capitalized although they relate to the same product

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