Choice "C" is correct. The capitalized costs of the patent include the purchase price of the patent, the VAT taxes, and the legal costs to register the patent: Patent asset$300,000 + 3,000 + 12,000$315,000 VAT taxes (value added taxes) are similar to sales taxes. Research expenditures must be expensed under IFRS (and U.S. GAAP). Staff training and administrative salaries must also be expensed. Choice "a" is incorrect. The patent asset should include the VAT taxes and the legal costs, as well as the purchase price of the patent.
Choice "d" is incorrect. The staff training costs and administrative salaries must be expensed in the period incurred. The capitalized costs of the patent include the purchase price of the patent, the VAT taxes, and the legal costs to register the patent.Choice "b" is incorrect. Under IFRS, all research costs must be expensed. The capitalized costs of the patent include the purchase price of the patent, the VAT taxes, and the legal costs to register the patent.