Question

discuss and explain the criteria and accounting treatment for recognizing and measurement of research and development expenditures in the financial statements as outlined in IAS-38 Intangible Assets.

Answer 1

IAS Intangible Assets : Intangible assets are the non monetary assets without physical existence which includes Research and Development expenses. the standard requires to meet certain criteria to be treated as intangible assets.

Recognition Criteria:

1) It is probable that's the future economic benefits that are attributable to the assets will flow to the entity.

2) cost of the asset can be measured realiably.

Recognition: Research and development costs

all research and development costs are charged as expense

development costs are capitalised only after the use of the asset has been established

Measurement:

If the criteria is not met, the expenses incurred are treated as an expense when it is incurred.

If the recognition criteria is met, the intangible assets are initially measured at cost, subsequently it is measured at cost or using the revaluation method and amortised over the useful life.