See IAS 36 for impairment testing. IAS 38 has illustrative examples. IAS 38 International Accounting Standard 38 Intangible Assets ... 5 This Standard applies to, among other things, expenditure on advertising, training, start-up, research and development activities. Under IFRS (IAS 38 2), research costs are expensed, like US GAAP. In relation to internally generated intangibles, IAS 38 gives further guidance on classification of generation of the asset into research phase and development phase and sets rules on determination of cost of an internally generated asset. IAS 38 covers the definition and recognition criteria for Intangible Assets. Research and Development, Uncertainty, and Analysts’ Forecasts: The Case of IAS 38 October 2015 Journal of International Financial Management & Accounting 26(3) [IAS 38.54] Development costs are capitalised only after technical and commercial feasibility of the asset for sale or use have been established. USEFUL LIFE Recognition criteria always considered met. Charge all research cost to expense. However, unlike US GAAP, IFRS has broad-based guidance that requires companies to capitalize development expenditures, including internal costs, when certain criteria are met. Under IAS 38 Intangible Assets, while research costs are expensed, development costs should be capitalised, if they meet the six conditions specified in the standard. IFRIC 32 applies IAS 38 to website costs. research and development costs (hereafter R&D). Nevertheless, from According to IAS 38 Intangible assets, which of the following statements concerning the accounting treatment of research and development expenditure are true? Acquiree’s in-process research & development project: Examples include: patents, licenses, & … Thus, at least technically, the capitalisation of development costs is not considered a managerial choice. If an entity cannot distinguish the research phase from the development phase of an internal project to create an intangible asset treats the expenditure on that project as if it were incurred in the See IAS 38 for retirements and disposals (similar to IAS 16 derecognition for PPE). (2) Research expenditure, other than capital expenditure on research facilities, should be recognised as an expense as incurred. a) research phase; and b) a development phase. Recognize the disclosures required by IAS 38. IAS 38 Intangible Assets 2017 - 05 3 Subsequent expenditure on an acquired in-process research and development project Research or development expenditure that: (a) relates to an in-process research or development project acquired separately or in a business combination and recognised as an intangible asset; and (1) If certain criteria are met, research expenditure may be recognised as an asset. Distinguish between research and development costs and apply the six criteria for capitalization of development expenditures. Cost = FV @acquisition date. Recall the rules for subsequent measurement of an intangible asset. 5. Research and development activities are directed to the development of knowledge. This means that the enterprise must intend and be able to complete the intangible asset and either use it or sell it and be able to demonstrate how the asset will generate future economic benefits. IAS 38, para 126, research and development expenditure in the year and further analysis IAS 38 para 126, analysis of R&D costs charged to income, segmental analysis, accounting policy IAS 38 paras 94-96, intangibles assigned useful life longer than contractual period as expected to … Determine the appropriate measurement of an intangible asset. • ‘research phase’ and ‘development phase’ have a broader meaning for the purpose of IAS 38. 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