Page 137 - F3 -FA Integrated Workbook STUDENT 2018-19
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Intangible assets
Research and development
2.1 Recognition
IAS 38 defines research as 'original and planned investigation undertaken with
the prospect of gaining new scientific or technical knowledge and
understanding' (IAS 38, para 8).
All research expenditure must be written off to the statement of profit or loss as it is
incurred.
Development costs are defined as 'the application of research findings or other
knowledge to a plan or design for the production of new or substantially
improved materials, devices, products, processes, systems or services before
the start of commercial production or use' (IAS 38, para 8).
Development costs must be capitalised as an intangible asset in the statement of
financial position provided that all of the following criteria are met:
Separate project
Expenditure identifiable and reliably measured
Commercially viable
Technically feasible
Overall profitable
Resources available to complete
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