• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

June 2025 ACCA Exam Results

Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for June 2025 exams.
Get your discount code >>

Capex

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Capex

  • This topic has 3 replies, 2 voices, and was last updated 6 years ago by Kim Smith.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • March 1, 2019 at 2:02 pm #506991
    alikhakar
    Participant
    • Topics: 187
    • Replies: 79
    • ☆☆☆

    Its just a general accounting question though..

    Investments on product development cant be capitalised until they have completed final development stage and ready to produce income.
    Suppose if the product development will take 3 yrs to complete final development stage ..now for the first two years ..expenses are written off in SOPL. In 3rd year the expenses will be capitalised.

    How much expenses will be capitalised in 3rd year? Only those incurred in 3rd year or all accumulated expenses from 1 2 & 3 year…..if all accumulated ..then what about FS of 1st and 2nd year which already contains expenses incurred ? What is the treatment ?

    March 1, 2019 at 2:36 pm #506998
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8312
    • ☆☆☆☆☆

    Costs of development can only be capitalised when all the asset recognition criteria are met (technical feasibility, intention to complete and use/sell, ability to use/sell, resources to complete and use/sell, etc). Up until this point, all development cost must be expensed (as for research). Once expensed, they are never subsequently capitalised (i.e. retrospectively).

    March 1, 2019 at 3:56 pm #507009
    alikhakar
    Participant
    • Topics: 187
    • Replies: 79
    • ☆☆☆

    Then sir what about products that require more than one year for development…then their development costs can never be accurately capitalised according to this standard…

    March 1, 2019 at 4:46 pm #507023
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8312
    • ☆☆☆☆☆

    The criteria for recognition of an intangible asset (assumed knowledge of FA (F3)) has nothing to do with periods of time. It depends on what it is that is being developed. Something might take years to develop but the criteria could all be met at a relatively early stage – allowing most of the costs to be capitalised.
    But if, for example, the technical feasibility or existence of a market for the output of the development can only be demonstrated towards the end of the development phase, most of the costs will be expensed.
    What the standard is seeking to ensure is that costs aren’t capitalised without expectation of future benefits to recoup the cost carried as an asset.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • omerbasheer on The Statement of Financial Position and Income Statement (part d)
  • Kim Smith on AA Chapter 9 Questions
  • Walkera on Basic Variance Analysis part 1 – ACCA Performance Management (PM)
  • kartierclass on AA Chapter 9 Questions
  • revathik on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in