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Putra Bhd. commenced a project to design a more efficient solar energy saving system to...

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Accounting

Putra Bhd. commenced a project to design a more efficient solar energy saving system to be used in households. The project began on 1 January 2019. The following are events related to that project in the year 2019: Months Cost January Paid RM145,000 in salaries of company engineers and consultants who conducted basic tests on existing solar energy saving systems available in the market. March Spent RM165,000 on developing a new system, including the production of a basic model. April The basic model, which was developed in March, was found to be ineffective in resolving issues related to existing solar energy saving systems. May Acquired a patent for SPONGEBOK360, a fibrous component, from CAPRI Bhd. for RM330,000. The purchase was made to be able to use the fibrous component in designing the system. June Spent RM135,000 on revising the processes and incorporated SPONGEBOK360 in the systems design. Required: Identify the accounting treatment for the various costs related to the solar energy saving system design. Justify your answer in accordance to research and development cost.

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