The company uses a standard mark-up on cost
From you audit files, you ascertain that total research and development expenditure for the year amounted to 4700000. This amount is substantially higher than in previous years and has eroded the profitability of the company. Mr Bosch, the company's finance director, has asked for your firm's advice on whether it is acceptable accounting practice for the company to carry forward any of this expenditure to a future accounting period.