Page 23 - Finac1 Test 3 slides - 2. Intangible Assets

TEST 3 PREPARATION

(a) The research phase

• No intangible asset arising from research shall be recognised.
Expenditure on research shall be recognised as an expense when

it is incurred. (IAS 38.54)

• The reason for this is that, in the research phase of a project, an

entity cannot demonstrate that an intangible asset exists that will
generate probable future economic benefits. (IAS 38.55)

• Examples of research activities are:

• activities aimed at obtaining new knowledge;
• the search for, evaluation and final selection of, applications of research
findings or other knowledge;

• the search for alternatives for materials, devices, products, processes,
systems or services; and
• the formulation, design, evaluation and final selection of possible
alternatives for new or improved materials, devices, products,
processes, systems or services. (IAS 38.56)

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