- This topic has 1 reply, 2 voices, and was last updated 9 years ago by
.
- Posts
Sir, supposing in the year 31 Dec 20X1, there was research expense expenditure from 1 Jan 20X1 to 1 Feb 20X1 and then the development expenditure started. From June 20X1, all the criteria for development expense to be capitalised were fulfilled. The development project will end in Dec 20X3.
So will the amount from June 20X1 be shown in the statement of financial position? and if so, will we charge amortisation on the capitalised development amount for the year 31 Dec 20X2?
If not then what will be the treatment?
Thanks
“So will the amount from June 20X1 be shown in the statement of financial position?”
Yes, because all the necessary criteria are fulfilled
“… will we charge amortisation on the capitalised development amount for the year 31 Dec 20X2?”
No, because the idea of depreciation and amortisation is to match the expense against the income that it has helped to generate and, until the project is completed and the development phase is over, there is no income against which to match the capitalised expenditure
“If not, what will be the treatment?”
There is no treatment – just keep on capitalising that development expenditure (so long as all necessary criteria continue to be satisfied) and show as an intangible asset in the statement of financial position
OK?
- The topic ‘Development expenditure’ is closed to new replies.