Kelly Ltd is currently working on four research and development projects. Summarised data relating to each project's expenditure and recoverable amount is provided below.

Actual ($000) Actual ($000) Budgeted ($000) Budgeted ($000) Budgeted ($000)
Project 2011 2012 2013 2014 2015
Alpha R & D expenditure 75 75 100 100 0
Expected revenue inflows 50 50 50 0 0
Beta R & D expenditure 200 200 350 0 0
Expected revenue inflows 0 0 500 1250 500
Gamma R & D expenditure 1500 500 250 0 0
Expected revenue inflows 0 0 1750 1750 750
Delta R & D expenditure 0 1500 0 0 0
Expected revenue inflows 0 0 500 250 250

All revenue and expenditure predictions are deemed to be 'probable'. A discount rate of 6 per cent is used. In relation to the specific projects, the following information is also available:

Project Alpha
This project involves the compilation of all known information about the abrasive natures of different types of sea weed. The revenue inflows of $50,000 per year are being provided by a major shipping company.

Project Beta
This project relates to the ultimate development of a surfboard that will allow surfers to do more radical manoeuvres. Fifty per cent of the expenditure in 2011 was considered to represent research, while the balance of the related expenditures represents development.

Project Gamma
This project involves the development of a wetsuit with a rechargeable heat-pack. Initially, surfers rejected the concept because they believed it would create pain because of small electric shocks, and sales prospects looked poor. However, in 2012, surfers changed their minds and large-scale demand for the product was created. Only $250,000 of the expenditure in 2011 was deemed to represent research and the balance of all other expenditure was deemed to be development.

Project Delta
This project involved the development of a new wrist watch that predicts the height of waves. $250,000 has been spent on research and the balance on development. It is expected that only $1,000,000 will be recoverable.