ACCA FR · Chapter 3 · Question 2 of 12
During the year Sanderling Co spent $120,000 on the research phase of a project. Development started on 1 March and all IAS 38 capitalisation criteria were first met on 1 June. Development costs were $90,000 from March to May and $210,000 from June to December. What amount should be recognised as an intangible asset at the year end?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $210,000
Explanation
Only development costs incurred after the recognition criteria are met can be capitalised, so the intangible asset is $210,000. Research costs of $120,000 and the $90,000 of development costs incurred before 1 June are expensed. Costs already expensed cannot be reinstated later.
More Intangible assets, impairment and assets held for sale MCQs
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- Q5Under IAS 36 Impairment of Assets, how is an asset's recoverable amount defined?
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- Q8Which of the following statements about reversing impairment losses under IAS 36 is correct?