Page 140 - F3 -FA Integrated Workbook STUDENT 2018-19

Chapter 9

Example 2

Research and development costs

State whether each of the following statements is true or false.

True/False

All intangible assets must be amortised False
An entity can choose whether or not to capitalise the False
cost of research activity
Intangible assets are classified as current assets in False
the statement of financial position

Explanation

If the useful life of an intangible asset cannot be reliably estimated, it cannot
be amortised. Instead, it is recognised at cost and subject to an annual
impairment review.

All research costs must be written off, unless they meet the criteria to be
classified as development costs, when they must be capitalised.

Intangible assets are classified as non-current assets.

134