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Question) Which of the following statements relating to intangible assets is true?
” Expenditure on the prototype of a new engine cannot be classified as an intangible asset because the prototype has been assembled and has physical substance”
Why is this statement false sir? Could you explain ?
Why is it false? Because it’s not true!! The statement states that expenditure (essentially development expenditure) in the development of a prototype cannot be capitalised.
That’s not my understanding of the correct treatment of development expenditure – surely it MUST be capitalised provided all the necessary criteria are fulfilled
OK?
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