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متابعة

How should research and development expenditure be dealt with in an entity's financial statements?

a. Research and development expenditure should always be written off as an expense b. Research and development expenditure should always be capitalised as an intangible asset c. Research expenditure should always be written off as an expense but development expenditure should always be capitalised as an intangible asset d. Research expenditure should always be written off as an expense but development expenditure should be capitalised as an intangible asset if it satisfies certain conditions

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تاريخ النشر: 2013/08/28
Tegegne Abrham
من قبل Tegegne Abrham , General Manager , MM BEDDING INDUSTRIES PLC

Option C and D looks similar but there is a difference on D statement which says if "if it satisfy certain conditions". The correct answer is D according IFRS no GAAP for in house R&D expenditure. In house R&D expenditures to be capitalized must satisfy certain conditions like

1. Existence of mark for the product and this can be expressed in monitory terms

2. It is probable that future economic befit will flow to the company ( to fulfill asset definition)

3. The result of the R&D is for the purpose of the company

4. The economic life of the Development must be known so as to amortize the cost

etc. What are the criteria for the purchased R&D expenditures to be capitalized.

Mohammed Salim Allana
من قبل Mohammed Salim Allana , Compliance and Assurance Manager , United Arab Bank

The answer appears to be D, being R&D expenses are in order to generate an Asset for the organisation and once its developed in the tangible form then these cost can be transferred to specific project.
d.
Research expenditure should always be written off as an expense but development expenditure should be capitalised as an intangible asset if it satisfies certain conditions.

imam imam
من قبل imam imam , Assistant branch manager , Habib bank limited

Research expenditure should always be written off as an expense but development expenditure should be capitalised as an intangible asset if it satisfies certain conditions

Prince Ninan
من قبل Prince Ninan , Audit Executive , Lewis & Pecker

 Research and development expenditure should always be capitalised as an intangible asset