CAF-6 · Chapter 12 · Question 1 of 15
Under IAS 38, how should a company account for the costs incurred during the 'research phase' of an internal project to create a new software system?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Expense them in profit or loss as they are incurred.
Explanation
IAS 38 strictly requires all expenditure incurred during the research phase of an internal project to be recognized as an expense when incurred, because an entity cannot demonstrate that an intangible asset exists that will generate probable future economic benefits.
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