Development expenditure
Development expenditure is expenditure on applying research findings or other knowledge to a plan or design for new or substantially improved products or processes. IAS 38 permits recognition as an intangible asset only when specified criteria are demonstrated; research expenditure is generally expensed when incurred.
Worked example
A software project enters development and demonstrates technical feasibility and the other required criteria; the auditor tests when qualifying expenditure began.
Common mistake
Do not capitalise all research and development costs merely because management expects a future benefit.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Supporting | September 2026–June 2027 |