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Hi I have been looking at question 21 Emerald in th BPP revision kit, and i do not understand the treatment of expenditure.
In the opentuition notes its says as the last criteria tht you ‘do not write back any costs previously expensed’ however in this question we have gone back to the year 20×4 to calculate amortisation and adjusted the SOFP, SOCI and SOCIE for years 20×6 and 20×7, why is this?
Jemma – I don’t know.
My only suggestion is that the expensing of previous amounts in earlier years is maybe a breach of IAS, a fundamental error, which is now being corrected. I don’t know the question and I don’t have access to the BPP kit
Question says “In September 2007 it has become aware that, under IFRS rules, qualifying development expenditure should be treated as an intangible asset. … Treating the above as the correction of an error in applying an accounting policy prepare FS”.
So it’s not the situation when previously recognised expenses (for research) are written back when expenditure are recognised as development expenditure. It is more the situation, when it was development expenditure and Emerald had to capitalise expenses but they didn’t (maybe before September 2007 they haven’t read IFRS carefull 🙂 )
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