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The past paper cashflow question Monty shows deferred development expenditure (DDE) as an outflow of 1200 under investing activities.
As per question, the outstanding balance of DDE as at the reporting date is 1000 (last year figure is Nil). And in the additional note indicates that amortisation of DDE is 200 which was included in SPL.
How does the DDE amortize at this stage? Could you help to explain the nature of DDE in the above question? My understanding is that it should be reclassified as intangible asset before it can start amortization.
“Amortisation must only begin when commercial production has commenced (hence matching the income and expenditure to the period in which it relates)” ACCA resource https://www.accaglobal.com/hk/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/rd.html
The figure shown in the cash flow statement is the amount spent on development expenditure.
The deferred development expenditure is the intangible asset.
Thank you for your clarification, It’s clear now. I love your lectures. Have good day sir.
Thanks Glad you love the lectures.