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Hello
In the answer to this question , I do not understand why in the first project the costs are expended while in the 2nd, cost is capitalized since in both projects Retto is developing the drug.
Hi,
In the first project there is no regulatory approval for the drug and so we do not meet the criteria for development and so the costs are expensed.
In the second project there has already been regulatory approval on the previous drug and this new drug is a slight modification so therefore no further regulatory approval is required. The criteria are therefore met for capitalisation.
The key is to remember the specific criteria for capitalisation of development costs.
Hope this helps.
Thanks
Hello
Thanks for responding, I really appreciate the assistance from yourself and OT since I am doing P2 on my own, I am relying on your guidance. However, from what I have read the criteria for capitalization of development cost are as follow:
1. Probable future economic benefits
2. Intention to complete and use or sell the asset
3. Resources (technical, financial and other resources) are adequate and available
to complete and use the asset4. Ability to use or sell the asset
5.Technical feasibility of completing the intangible asset (so that it will be available
for use or sale)6.Expenditure can be measured reliably
My question is in which one of the above does the “regulatory approval” fall into?
Thanks
Glad we’re able to help you out. Keep up the hard work.
If we get regulatory approval then it would mean we’re likely to complete the asset.
Thanks
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