PAGE 19Research and Development Expense •Cost incurred during product development and charged as expensed as incurred. •Product development only relates to new products and services being created by the entity. This does not include the routine improvements and modification to existing products. •Due to the uncertainty of such experimental activities all cost shall be charged to expense unless PPE or IA are acquired with an alternative future use. In such case the cost shall be capitalized and only the depreciation or amortization is charged to R and D expense. •Once technological feasibility is achieved, cost is now capitalized as intangible asset such as “formula”“model”or “prototypes”•Also, contractually reimbursable research and development cost is treated as a receivable. , . 11. Summer Company incurred research and development costs in 2017 as follows: Equipment acquired for use for various research and development projects 6,000,000 Depreciation on the above equipment 1,200,000 Materials used 3,000,000 Compensation costs of personnel 4,000,000 Outside consulting fees 1,500,000 Indirect costs appropriately allocated 1,300,000 What is the 2017 total research and development expense? 12. Humble Company incurred the following costs during 2017: Quality control during commercial production, including routine testing of products 500,000 Laboratory research aimed at discovery of new knowledge 700,000 Testing for evaluation of new products 300,000 Engineering follow-through in an early phase commercial production 1,000,000 Adaptation of an existing capability to a particular requirement or customer’s need as part of continuing commercial activity200,000 Trouble-shooting in connection with breakdowns during commercial production 800,000 Searching for application of new research findings 450,000 What was Humble Company’s research anddevelopment expense for 2017?