Question：A whisky distiller incurs the following costs: $38,000 developing new distilling techniques that will be put in place shortly to cut the production cost of making malt whisky; $27,000 researching a new process to improve the quality of standard whisky and $8,000 on market research into the commercial viability of a new type of malt whisky. It is company policy to capitalise costs whenever permitted by IAS 38.
　　How much should be charged as research and development expenditure in profit or loss? (ignore amortisation)
　　A. $27,000
　　B. $73,000
　　C. $38,000
　　D. $35,000
　　The correct answer is: $27,000.
　　This is not directed towards a confirmed outcome and will be written off as research expenditure. The other costs must be capitalised on the Statement of financial position.