ACCA FA · Chapter 6 · Question 10 of 12
Under IAS 38 Intangible Assets, how should research expenditure be treated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) It must be recognised as an expense when it is incurred
Explanation
IAS 38 prohibits capitalisation of research costs because an entity cannot demonstrate at the research stage that an intangible asset will generate probable future economic benefits. Research costs are therefore always expensed. Only development costs that meet all of the IAS 38 criteria are capitalised.
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