ACCA FA · Chapter 6 · Question 11 of 12
During the year, a company spent $120,000 on research and $250,000 on developing a new product. Of the development costs, $90,000 was incurred before all the IAS 38 recognition criteria were met, and $160,000 afterwards. What amount should be recognised as an intangible asset at the year end (ignoring amortisation)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $160,000
Explanation
Only development costs incurred after all the recognition criteria are met can be capitalised, so $160,000 is recognised. The $90,000 incurred earlier and the $120,000 research costs are expensed (a total of $210,000), and costs once expensed cannot later be reinstated as an asset.
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