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February 7, 2021 at 11:42 am
Hi, this lecture was a little bit confusing for me. You mention capitalising certain costs, does this mean recording it as an asset in SOFP, rather than a loss in SOPL?
Also regarding development expenditure, would we say salaries for these workers are assets? And if so how can we amortise it?
John Moffat says
February 7, 2021 at 3:11 pm
As is written in the notes and as I state in the lecture, all the costs of development are capitalised and shown as assets in the SOFP.
Costs of research are not capitalised and are charged as an expense in the SOPL (except in so far as any non-current assets purchased are capitalised in the normal way as explained in the earlier lectures on non-current assets).
Salaries of the workers for part of the total cost of development (if they are working on development) and the total cost of development is capitalised.
The total cost is amortised/depreciated in the normal way.
February 7, 2021 at 4:22 pm
What does capitalise or ‘capitalising a cost’ mean? Does it mean keep it as an asset in SOFP, or is there another meaning?
September 14, 2020 at 7:01 pm
Hi John. As you mentioned that the salaries of scientist who are doing research shall always be expense out. However, if the same scientist are in development phase and meeting all the defined criteria for development then the salary of scientist (for development period only) will also be capitalized? Similarly if the office space is taken on rent for research n development. For research related time period, rent would definitely be expense out however for the development phase, when development is certain, the rent for that period will be capitalized?
November 19, 2019 at 11:44 am
thanks for information
January 13, 2019 at 4:21 pm
Thanks much 4 ur good material 4 ACCA
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