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Could you tell me why the research expenditure have to be deducted or written off when it incurred? I understand that research expenditure as expense which different from amortisation no need to write down…,right?
It is a rule in the IAS 🙂
The logic is that whereas with development expenditure we are sure we are going to earn income because of it, so we capitalise the expenditure (just as we would do if we bought a machine) and depreciate/amortise it to spread the cost over the period we expect to earn income.
With research expenditure we do not know if we will ever earn any income from it in the future so the whole amount had to be charged as an expense in the year we spend it.The free lecture will help you with this.
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