R&D

Question 1

What is intangible asset ?

Answer 1

Nonmonetary nonphysical asset
Eg. Trademark, goodwill, franchise

Question 2

Which intangible asset can be capitalised?

Answer 2

Ones that were purchased

Internally generated can’t

Question 3

What is research?

Answer 3

Investigating new technical/scientific knowledge or understanding

Question 4

What is development?

Answer 4

Applying research results to plan for production of new or improved products,materials, services before commercial use/production

Question 5

Does research cost goes to P/L ?

Answer 5

Yes

Not always lead to benefit

Question 6

For development cost to be capitalised what criteria must be met ?

Answer 6

Has potential economic benefit

There is intention to complete asset to use or sell

Cost can be measured

Resources are available

Will be profitable

Is technically feasible (possible to do/sell)

Question 7

Over what period asset should be amortised?

Answer 7

Where is expected to benefit ie: Match revenue

Question 8

How amortisation should be applied ?

Answer 8

Begin with commercial production

Review annually if criteria are met if not write of to P/L

Question 9

How intangible assets should be measured?

Answer 9

At cost, fair market value is near impossible in practice

Question 10

What should be disclosed in statements about amortisation?

Answer 10

Method,expected period, amortisation for the period, amounts at beginning and end