Acca financial Accounting (FA) Study Text ac ca (FA)

What adjustments, if any, should be made in the financial statements 

of ABC Co relating to this inventory? 

A 

No adjustments required 

B 

Increase the value of inventory by $10,000 

C 

Decrease the value of inventory by $10,000 

D 

Decrease the value of inventory by $20,000 

78  Cowper Co incurred costs of $20,000 researching new cleaning chemicals 

during the year ended 31 December 2005. It also incurred expenditure of 

$40,000 developing a new cleaning product which will not go into 

commercial production until next year. The development project meets the 

criteria specified in IAS 38 Intangible Assets.