According to IAS 38 Intangible assets, which of the following statements about research and

development expenditure are correct?

1 Research expenditure, other than capital expenditure on research facilities, should be recognised

as an expense as incurred.

2 In deciding whether development expenditure qualifies to be recognised as an asset, it is

necessary to consider whether there will be adequate finance available to complete the project.

3 Development expenditure recognised as an asset must be amortised over a period not exceeding

five years.

• 1, 2 and 3

• 1 and 2 only

• 1 and 3 only

• 2 and 3 only

According to IAS 38 Intangible assets, which of the following statements about research and

development expenditure are correct?

1 If certain conditions are met, an entity may decide to capitalise development expenditure.

2 Research expenditure, other than capital expenditure on research facilities, must be written off as

incurred.

3 Capitalised development expenditure must be amortised over a period not exceeding 5 years.

4 Capitalised development expenditure must be disclosed in the statement of financial position

under intangible non-current assets.

• 1, 2 and 4 only

• 1 and 3 only

• 2 and 4 only

• 3 and 4 only

According to IAS 38 Intangible assets, which of the following statements concerning the accounting

treatment of research and development expenditure are true?

1 Development costs recognised as an asset must be amortised over a period not exceeding five

years.

2 Research expenditure, other than capital expenditure on research facilities, should be recognised

as an expense as incurred.

3 In deciding whether development expenditure qualifies to be recognised as an asset, it is

necessary to consider whether there will be adequate finance available to complete the project.

4 Development projects must be reviewed at each reporting date, and expenditure on any project

no longer qualifying for capitalisation must be amortised through the statement of profit or loss

and other comprehensive income over a period not exceeding five years.

• 1 and 4

• 2 and 4

• 2 and 3

• 1 and 3

According to IAS 38 Intangible assets, which of the following statements is/are correct?

1 Capitalised development expenditure must be amortised over a period not exceeding five years.

2 If all the conditions specified in IAS 38 are met, development expenditure may be capitalised if

the directors decide to do so.

3 Capitalised development costs are shown in the statement of financial position under the heading

of non-current assets.

4 Amortisation of capitalised development expenditure will appear as an item in a company’s

statement of changes in equity.

• 3 only

• 2 and 3

• 1 and 4

• 1 and 3

According to IAS 38 Intangible assets, which of the following are intangible non-current assets in the

financial statements of Iota Co?

1 A patent for a new glue purchased for $20,000 by Iota Co

2 Development costs capitalised in accordance with IAS 38

3 A licence to broadcast a television series, purchased by Iota Co for $150,000

4 A state of the art factory purchased by Iota Co for $1.5million

• 1 and 3 only

• 1, 2 and 3 only

• 2 and 4 only

• 2, 3 and 4 only

According to IAS 38 Intangible assets, which of the following statements about intangible assets are

correct?

1 If certain criteria are met, research expenditure must be recognised as an intangible asset.

2 If certain criteria are met, development expenditure must be capitalised

3 Intangible assets must be amortised if they have a definite useful life

• 2 and 3 only

• 1 and 3 only

• 1 and 2 only

• All three statements are correct

According to IAS 38 Intangible assets, which of the following statements concerning the accounting

treatment of research and development expenditure are true?

1 If certain criteria are met, research expenditure may be recognised as an asset.

2 Research expenditure, other than capital expenditure on research facilities, should be recognised

as an expense as incurred.

3 In deciding whether development expenditure qualifies to be recognised as an asset, it is

necessary to consider whether there will be adequate finance available to complete the project.

4 Development expenditure recognised as an asset must be amortised over a period not exceeding

five years.

5 The financial statements should disclose the total amount of research and development

expenditure recognised as an expense during the period.

• 1, 4 and 5

• 2, 4 and 5

• 2, 3 and 4

• 2, 3 and 5

According to IAS 38 Intangible assets, which of the following statements are correct?

1 Research expenditure should not be capitalised.

2 Intangible assets are never amortised.

3 Development expenditure must be capitalised if certain conditions are met.

• 1 and 3 only

• 1 and 2 only

• 2 and 3 only

• All three statements are correct

According to IAS 38 Intangible assets, what amount should be charged in the statement of profit or loss and other comprehensive income for research and development costs for the year ended 31 December 20X7?

The following balances existed in the accounting records of Koppa Co, at 31 December 20X7. $’000

Development costs capitalised, 1 January 20X7 180

Research and development expenditure for the year 162

In preparing the company’s statement of profit or loss and other comprehensive income and statement of

financial position at 31 December 20X7 the following further information is relevant.

The $180,000 total for development costs as at 1 January 20X7 relates to two projects: $’000

Project 836: completed project 82

(balance being amortised over the period expected to benefit from it.

Amount to be amortised in 20X7: $20,000)

Project 910: in progress 98

180

(b) The research and development expenditure for the year is made up of: $’000

Research expenditure 103

Development costs on Project 910 which continues to satisfy the

requirements in IAS 38 for capitalization 59

162

• $123,000

• $182,000

• $162,000

• $103,000

The following balances existed in the accounting records of Koppa Co, at 31 December 20X7. $’000

Development costs capitalised, 1 January 20X7 180

Research and development expenditure for the year 162

In preparing the company’s statement of profit or loss and other comprehensive income and statement of

financial position at 31 December 20X7 the following further information is relevant.

(a) The $180,000 total for development costs as at 1 January 20X7 relates to two projects: $’000

Project 836: completed project 82

(balance being amortised over the period expected to benefit from it.

Amount to be amortised in 20X7: $20,000)

Project 910: in progress 98

180

(b) The research and development expenditure for the year is made up of: $’000

Research expenditure 103

Development costs on Project 910 which continues to satisfy the

requirements in IAS 38 for capitalization 59

162

According to IAS 38 Intangible assets, what amount should be disclosed as an intangible asset in the

statement of financial position for the year ended 31 December 20X7?

• $219,000

• $180,000

• $160,000

• $59,000