Research and Development Expenditure

Question 1

What is included in IAS 38?

Answer 1

Research and development

Question 2

What is research?

Answer 2

Original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding

Question 3

What is development?

Answer 3

Application of research findings or other knowledge to a plan or design for the production of new or substantially improved

Question 4

Example of substantially improved in development?

Answer 4

Materials
Devices
Products
Processes
Systems or services

Before the start of commercial production or use

Question 5

What cannot happen with research?

Answer 5

It cannot be capitalised as an intangible asset and must be expensed to SOPL

Question 6

Under IAS 38, an entity must capitalise development expenditure if it satisfies all criteria (P)

Answer 6

Probable future economic benefits

Question 7

Under IAS 38, an entity must capitalise development expenditure if it satisfies all criteria (I)

Answer 7

Intention to complete and use/sell asset

Question 8

Under IAS 38, an entity must capitalise development expenditure if it satisfies all criteria (R)

Answer 8

Resources adequate and available to complete and use/sell asset

Question 9

Under IAS 38, an entity must capitalise development expenditure if it satisfies all criteria (A)

Answer 9

Ability to use/sell the asset

Question 10

Under IAS 38, an entity must capitalise development expenditure if it satisfies all criteria (T)

Answer 10

Technical feasibility of completing asset for use/sale

Question 11

Under IAS 38, an entity must capitalise development expenditure if it satisfies all criteria (E)

Answer 11

Expenditure can be measured reliably