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Examples include: patents, licenses, & … IAS 38 covers the definition and recognition criteria for Intangible Assets. Standard also prescribes rules for measurement after recognition and permits 2 models: Cost model; and Under IFRS (IAS 38 2), research costs are expensed, like US GAAP. See IAS 38 for retirements and disposals (similar to IAS 16 derecognition for PPE). 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. Determine the appropriate measurement of an intangible asset. (2) Research expenditure, other than capital expenditure on research facilities, should be recognised as an expense as incurred. 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. 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 Nevertheless, from Cost = FV @acquisition date. Recognize the disclosures required by IAS 38. • ‘research phase’ and ‘development phase’ have a broader meaning for the purpose of IAS 38. 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. Distinguish between research and development costs and apply the six criteria for capitalization of development expenditures. According to IAS 38 Intangible assets, which of the following statements concerning the accounting treatment of research and development expenditure are true? 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. Thus, at least technically, the capitalisation of development costs is not considered a managerial choice. 5. Research and development activities are directed to the development of knowledge. Acquiree’s in-process research & development project: Research and Development, Uncertainty, and Analysts’ Forecasts: The Case of IAS 38 October 2015 Journal of International Financial Management & Accounting 26(3) research and development costs (hereafter R&D). Recall the rules for subsequent measurement of an intangible asset. (1) If certain criteria are met, research expenditure may be recognised as an asset. Under IAS 38, Intangible Assets are property that does not have a physical form but meets the three definition criteria: identifiable, controllable property that provides future economic benefits. USEFUL LIFE Recognition criteria always considered met. [IAS 38.54] Development costs are capitalised only after technical and commercial feasibility of the asset for sale or use have been established. a) research phase; and b) a development phase. 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 … 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 IFRIC 32 applies IAS 38 to website costs. See IAS 36 for impairment testing. IAS 38 has illustrative examples. 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