Eva

This topic has 3 replies, 2 voices, and was last updated 10 years ago by Ken Garrett.

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March 3, 2016 at 2:57 pm #303258
seanog91
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Should product development costs get added back to EVA? To me, it should be as it is costs that are planning for the future of the company.
March 3, 2016 at 6:18 pm #303294
Ken Garrett
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Certainly R&D are added back, so I would say that product developent costs come under that category.
Have you found an exception to that?
March 3, 2016 at 8:12 pm #303310
seanog91
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In 2014
https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p5/exampapers/P5_2014_Dec_q.pdf
https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p5/exampapers/P5_2014%20_dec_Ans.pdf
the production costs was not added back to the calculation. after pasting the link to the solution I realised that credit was giving if it was included but why would anyone leave it out?
Could it be assumed that it was capitalised and therefore excluded?
March 4, 2016 at 8:09 am #303377
Ken Garrett
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That is the only sensible answer. The IAS says that research should be written off and development capitalised (subject to certain tests).
I’m glad the answer recognised ambiguity in the question.
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