Question

In: Accounting

What costs are incurred to create intangibles? What are the/is the classification(s) of intangibles? Types of...

  • What costs are incurred to create intangibles?
  • What are the/is the classification(s) of intangibles?
  • Types of research and development expenses?

can someone please clarify these bullet points for me? It doesn't have to be real in debth just a little confused on these topics

Solutions

Expert Solution

Answer:

Cost of an internally generated intangible asset:

The cost of an internally generated intangible asset for the purpose of initial measurement at recognition is the sum of expenditure incurred from the date when the intangible asset first meets the recognition criteria.

Cost inclusions:

The cost of internally generated intangible asset comprises of all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management.

Examples of directly attributable costs are:

1.Costs of materials and services used or consumed in generating the intangible asset.

2. Costs of employee benefits arising from the generation of intangible asset.

3. Fees to register a legal right.

4. Amortisation of patents and licenses that are used to generate the intangible asset.

Cost exclusions:

1. Selling, administrative and other general overhead expenditure unless this expenditure can be directly attributed to preparing the asset for use.

2. Identifies inefficiencies and initial operating losses incurred before the asset achieves planned performance and

3. Expenditure on training staff to operate the asset

Classification of intangibles:

1. Marketing related

2. Customer related

3. Technology based

4. Artistic related

5. Contract based

Types of research and development expenses:

1. Individual current costs:

a. Labour costs for internal R&D personnel.

b. Purchase of services

c. Purchase of materials etc.,

2. Capital costs:

a. Land and buildings

b. Machinery and equipment

c. Capitalised computer software

d. Other intellectual property products

Thankyou.....


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