Computer software

Question 1

Research and development costs in IFRS are accounted for separately

Answer 1

Research - expense as incurred if no future
economic benefit

Development costs - can be capitalized provided it meets all of the 6 criteria

Question 2

Criteria must ALL be met to capitalize Developments costs

Answer 2

1. technological feasibility has been achieved
2. entity intends to complete and use or sell the
   asset
3. entity has the ability to use or sell the asset
4. entity understands how the asset will
   generate probable future economic benefits
5. technical, financial and other resources are
   available to complete development of the
   asset
6. entity has the ability to reliably measure the
   expenditures

Question 3

Computation of IFRS - Impairment of intangibles

Answer 3

Carrying value > Recoverable amount
= Impairment loss

Recoverable amount:

Pick the correct depreciation rate which is the LARGER OF:

1. Net selling price (FV-cost to dispose)
2. Value in use (estimated future cash flows-
   cost to dispose)

Compare the larger amount to carrying value.
If CV > RA = Impairment loss